Question 1. Prepare a budget for this year for the
Administrative Department at Tomâ€™s Toyota Company based on the following
Last Year Forecasting
Assumption Budget for this
Salaries $60,000 2%
900 1% decrease ___________
2,500 3% increase ___________
1,200 2.5% increase ___________
Office Rent $10,000
2% increase ___________
4,000 no change ___________
Question 2. Define a â€œStatic Budget.â€
Question 3. Define a â€œFlexible Budget.â€
Question 4. Define the term â€œZero-based Budgeting.â€
Question 5. Define â€œPeriod Budgets.â€
Question 6. Define â€œRolling Budgets.â€
Question 7. Big Bob’s Discount Appliances expects sales of
$5,000, $5,000, and $10,000 during April, May, and June (big sale in June). To
build business, Big Bob lets all customers buy on credit, and all do so. In the
past, 50% of Big Bob’s sales have been collected during the month of sale, 40%
are collected the following month, and 10% the month after that. If this trend
continues, what will be Big Bob’s total cash collections in the month of June?
Question 8. Little Louieâ€™s expects to have $100 in cash on
hand at the beginning of June, and the company’s target cash balance is $100.
Net cash flow for June is minus $300. Assuming that Little Louieâ€™s borrows to
meet short term cash needs and pays back as soon as surplus cash is available,
what will be the company’s ending cash balance after financing at the end of
Question 9. Ma & Pa Kettleâ€™s Chili Company has begun
selling a new chili recipe and they want you to help them with next yearâ€™s
budgeted financial statements. Using the worksheet below, complete Ma &
Paâ€™s forecast and answer the questions which follow.
To begin with, Ma & Pa are sure sales will grow 50% next
year. Assume that is true. Then assume that COGS, Current Assets, and Current
Liabilities all vary directly with Sales (that means if sales grows a certain
percentage, then the account in question will grow by that same percentage).
Assume that fixed expenses will remain unchanged and that $1,000 worth of new
Fixed Assets will be obtained next year. Lastly, the current dividend policy
will be continued next year.
Ma & Pa Kettle Chili Company, Inc.
This year for next year
Sales $10,000 ________
COGS 4,000 ________
Fixed Expenses 3,000 ________
Before Tax Profit
Tax @ 33.3333%
Current Assets $25,000 ________
Net Fixed Assets
Current Liabilities $17,000 ________
Long term debt 3,000 ________
Common Stock 7,000 ________
Total Liabs & Eq $40,000 ________
Amount need to balance the balance sheet ________
(Projected total assets minus projected
total liabilities & equity *)
* If this number is XXXXX it means Ma & Pa need
additional external funding to finance their projected asset growth. If this
number is XXXXX it means Ma & Pa have programmed too much financing for the
amount of assets they project.