Advantage Manufacturing is preparing a master budget for the quarter ending 30 September 2017, and has compiled the data shown overleaf.

1. The firm sells a single product at a price of $60 per unit. The sales forecast (in units) prepared by the marketing department for the quarter ending 30 June 2017 and the first 7 months of the next financial year is as follows:

		Number of units
April May June July August September October November December January		28800 28800 30000 31200 33600 33600 37200 38400 43200 57600

2. 40% of the sales are collected in the month of sale, 40% are collected in the following month, and 20% are collected in the second month following the sale.

3. The beginning inventories on 1 July 2017 will be 10800 units of finished goods and no raw materials. The ending finished goods inventory should equal 20% of the sales requirements for the next 3 months, and the raw materials ending inventory should equal 40% of the next month’s production.

4. 80% of the materials purchases are paid in the quarter of purchase and 20% are paid in the following quarter. The amount owing for purchases at 1 July 2017 is $196800.

5. Variable selling expenses are 5% of sales. Administrative expenses are $126000 per quarter, of which $20000 represents depreciation expense and $96000 is wages. Fixed selling expenses are $36000 each quarter. All selling and administrative expenses are paid in the quarter in which they are incurred.

6. The production requirements are:

	Direct materials		Direct labour
Per unit	1.1 kg		0.5 hour

The direct materials are purchased for $8.00 a kilogram. The direct labour wage rate is $24 an hour. The factory overhead cost is $154000 per month, and is paid in the month incurred (except for depreciation of $28000).

7. The 1 July 2017 cash balance is expected to be $40320.

Required

A. Prepare a sales budget by month for the period May to September 2017.

B. Determine estimated cash collections from receivables for the first quarter of the financial year commencing 1 July 2017.

C. Calculate the number of units to be produced in the first quarter of the financial year commencing 1 July 2017.

D. Prepare a direct materials budget for the first quarter of the financial year commencing 1 July 2017.

E. Prepare a cash budget for the first quarter of the financial year commencing 1 July 2017 including any necessary schedules.

F. Prepare a budgeted income statement for the first quarter of the financial year commencing 1 July 2017.