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 last few years that it has become necessary to add new members to the management team. You have been given direct responsibility for all planning and budgeting. Your first assignment is to prepare a master budget for the next three months, starting April 1. You are anxious to make a favourable impression on the president and have assembled the information below. The company desires a minimum ending cash balance of 10,000. The ties are sold to retailers for 8 each. Recent and forecasted sales in units are as follows: January (actual)........ 20,000 June... . . . . . .. . . ...... 60,000 February (actual)...... 24,000 July ..... ...... . 40,000 March (actual)......... 28,000 August ........ ..36,000 April . . ..... 35,000 September .......... 32,000 May .... 45,000 The large build-up in sales before and during June is due to Father's Day. Ending inventories are supposed to equal 90
