You have just been hired as a management trainee by Cravat Sales Company,

You have just been hired  as a management  trainee by Cravat Sales Company, a nationwide distributor of a designer's silk ties.The Company has an exclusive franchise on the distribution of the ties, and sales have grown  so rapidly  over the past few years  that it has become necessary  to add new members to the management team. To date ,the company's budgeting  practices  have inferior,and at times the company has experienced a cash shortage .You have given responsibility for all planning  and budgeting. Your first assignment is to prepare master budget for the next three months, starting April  1,You are engage to make a favorable  impression  on the president  and have assembled the information below:-

  The Ties are sold to retailers for --$8 each. Recent and forecast  sales in units are as follows:-:

January (Actual)       : 22000

February (Actual)     :33000

March (Actual)         :  37000

April (Budget)           : 41000

May (Budget)          : 51,000

June (Budget)          : 67000

July (Budget)            :46000

August (Budget)      :37,000

September (Budget) :34,000

 The large buildup in sales before and during May is due to Father’s Day. Ending inventory should be equal to 90% of the sales of the next month's sales in units.

The ties cost the Company $5 each. Purchases are paid  for as follows: 50% in the month of purchase and the remaining 50% in the following month. All sales are on credit, with no discount, and payable within 15 days. The company has found, however, that only 25% of a month’s sales are collected in the month of sale. An additional 50% is collected in the following month following sale and remaining 25% is collected in the second month  following sale. Bad Debts have been negligible.

The company's monthly selling and administrative expenses are  given below:

Variable: