Name(s)

Common Data Spreadsheet

ACC 240 Budget Project Spring 2016
You have just been hired as a new management trainee by Tasers, Inc. a wholesaler of tasers selling
only to a variety of law enforcement agencies across the U.S.
In the past, the company has done very little in the way of budgeting and at certain times the year
has experienced a cash shortage.
Because you are well trained in budgeting as a result of your having taken ACC 240 at Nichols College,
you have decided to prepare comprehensive budgets for the upcoming second quarter to show management
the benefits that can be realized from an integrated budgeting program. To this end, you have worked
with accounting and other areas of the company to gather the information presented below.
The company sell many styles of taser but they all currently sell at wholesale for
Actual unit sales for the last three months
Units
April
May
June
July
August

and budgeted sales for the next six months are:

Basis
Units
20000
actual
September
18000
actual
October
15000
actual
November
80000
budget
December
80000
budget

75000
60000
55000
50000

319 each

Basis
budget
budget
budget
budget

Sales pick up after June 30 government agencies' new budget for the fiscal year kicks in.
Sufficient inventory needs to be on hand at the end of each month and that is determined
to be
40% of next month's sales.
The cost of each taser from the manufacturer is
$
150 per unit. Purchases in any month
are paid 50% in the month of purchase and 50% in the following month. All sales are on account
n/30 but experience shows customers on average pay as follows:
Month of sale
Month following sale
Second month following sale

30%
60%
10%

Tasers, Inc.
Balance Sheet
30-Jun-15

Bad debts are negligible.

Monthly operating expenses are as follows:
Variable:
Sales commissions

4% of sales

Fixed:
Advertising
Rent
Salaries
Utilities
Insurance
Depreciation

$
$
$
$
$
$

$
500,000
72,000
1,060,000
7,000
10,000
14,000

plus

10%

of sales

The company plans to make equipment purchases this year as follows:

August
November

$
$

Cash
Accounts receivable
Inventory
Patents (not amortized)
Property and equipment (net)
Total assets

250,000
4,497,900
5,100,000
3,000
950,000
10,800,900

Accounts payable (for product purchases)

Dividends payable
Common Stock
Retained earnings
Total liabilities and stockholders' equity

5,220,000
25,000
2,000,000
3,555,900
10,800,900

Other information:

$
100,000
100,000

The company declares a dividend at the end of each quarter payable in the first month of the
of the following quarter of
$25,000

Sales Budget
August
September
Quarter
80,000
80,000
75,000
235,000
$319
$319
$319
$319
25,520,000 25,520,000
23,925,000 74,965,000

The company desires to maintain a minimum cash balance of

$
500,000
All borrowings are made at the beginning of the month and repaid at the end of the month.
The interest rate charged by the bank is
6%
per annum.
Repayments of principal plus accrued interest will occur in the month when the entire amount
owed (plus interest) can be repaid. Any interest unpaid at the end of a quarter must be accrued
and the related expense and liability reported appropriately. Any principal amount owing to
the bank at the end of the quarter will be reported as notes payable on the balance sheet.

July

Budgeted unit sales

Selling price per unit
Total sales

Cash from:
May sales
June sales
July Sales

5,742,000
4,785,000

Schedule of Expected Cash Collections

July
August
September
Quarter
574,200
0
0
574,200
2,871,000
478,500
0
3,349,500
7,656,000 15,312,000
2,552,000 25,520,000

Accounts payable
July purchases
August purchases
September purchases
Total cash payments

Beginning cash balance

Budgeted Cash Disbursements for Merchandise Purchases

July
August
September
Quarter
5,220,000
5,220,000
5,850,000
5,850,000
0 11,700,000
0
5,850,000
5,850,000 11,700,000

0
11,070,000

July
250,000

0
11,700,000

5,175,000
11,025,000

5,175,000
33,795,000

Cash Budget
August
September
500,000
12,390,300

Quarter
500,000

August sales
September sales
Total cash collections

0
0
11,101,200

7,656,000
0
23,446,500

15,312,000
7,177,500
25,041,500

22,968,000
7,177,500
59,589,200

Merchandise Purchases Budget

August
September
80,000
80,000
75,000
32,000
30,000
24,000
112,000
110,000
99,000
34,000
32,000
30,000
78,000
78,000
69,000
150
150
150
11,700,000 11,700,000
10,350,000

Quarter
235,000
24,000
259,000
34,000
225,000
150
33,750,000

July

Budgeted unit sales

Add: desired ending inventory
Total needs
Less: Beginning merchandise inventory
Required purchases
Unit cost
Required dollar purchases

6/30/2015
$
$

Add collections from customers

Total cash available
Lee: cash disbursements

11,101,200
11,351,200

23,446,500
23,946,500

25,041,500 59,589,200
37,431,800 60,089,200

Merchandise purchases
Advertising
Rent
Salaries
Commissions
Utilities
Insurance
Equipment purchases
Dividends paid
Total cash disbursements
Excess cash available over disbursements
Financing:
Borrowings
Repayments
Interest
Total financing
Ending cash balance
$

11,070,000
500,000
72,000
3,612,000
1,020,800
7,000
10,000
0
25,000
16,316,800
(4,965,600)

11,700,000
500,000
72,000
3,612,000
1,020,800
7,000
10,000
100,000
0
17,021,800
6,924,700

11,025,000 33,795,000
500,000
1,500,000
72,000
216,000
3,452,500 10,676,500
957,000
2,998,600
7,000
21,000
10,000
30,000
0
100,000
0
25,000
16,023,500 49,362,100
21,408,300 10,727,100

Tasers, Inc.
Budgeted Income Statement
For the quarter ending 9/30/2015
Sales
Variable expenses:
Cost of goods sold
Salaries
Commissions

0
5,465,600
500,000

5,465,600
0
5,465,600
12,390,300

0
81,984
81,984
21,490,284

Tasers, Inc.
Balance Sheet
9/30/2015
$

74,965,000

33,750,000
7,496,500
2,998,600

44,245,100

Contribution margin
Fixed expenses:
Advertising
Rent
Salaries
Utilities
Insurance
Depreciation
Net operating income (EBIT)
Interest expense
Earnings before taxes (EBT)

5,465,600

30,719,900

500,000
72,000
1,060,000
7,000
10,000
14,000
1,663,000
29,056,900
81,984
28,974,916

Assets
Cash
Accounts receivable
Inventory
Patents
Property and equipment (net)
Total assets

21,490,284
19,299,500
7,656,000
3,000
93,000
48,541,784

Liabilities and Stockholders' Equity

Accounts payable (for product purchases)
Dividends payable
Common Stock
Retained earnings
Total liabilities and stockholders' equity

5,625,000
25,000
2,000,000
40,891,784
48,541,784

5,465,600
5,465,600
81,984
11,013,184
21,490,284