Jacobs Incorporated manufactures a product with a selling price of $50 per unit. Units and monthly cost data follow:

Jacobs pays all bills in the month incurred. All sales are on account with 50 percent collected the month of sale and the balance collected the following month. There are no sales discounts or bad debts. Jacobs desires to maintain an ending finished goods inventory equal to 20 percent of the following month's sales and a raw materials inventory equal to 10 percent of the following month's production. January 1, 2011, inventories are in line with these policies. Actual unit sales for December and budgeted unit sales for January, February, and March of 2011 are as follows:

Additional information:

The January 1 beginning cash is projected as $7,000.

For the purpose of operational budgeting, units in the January 1 inventory of finished goods are valued at variable manufacturing cost.

Each unit of finished product requires one unit of raw materials.

Jacobs intends to pay a cash dividend of $6,000 in January.

Required:

(a) A production budget for January and February.

(b) A purchases budget in units for January.

(c) A manufacturing cost budget for January.

(d) A cash budget for January.

(e) A budgeted contribution income statement for January.

(f) Prepare a cash budget for January assuming management plans to increase the January end raw materials inventory to 100 percent of February's production needs.

Variable: Selling and administrative Direct materials Direct labor Variable manufacturing overhead Fixed: Selling and administrative Manufacturing (including depreciation of $10,000) $5 per unit sold 10 per unit manufactured 10 per unit manufactured 5 per unit manufactured $20,000 per month 30,000 per month Month Sales - Units Sales - Dollars JACOBS INCORPORATED Sales Budget For the Months of January, February, and March 2011 December January February 5,750 $287,500 3,000 $150,000 10,000 $500,000 March 7,000 $350,000