1 (22 points). Jango Fett Inc., produces wiring harness assemblies used in the production human robotics. The wiring harness assemblies are sold to various robotic manufacturers around the world. Projected sales in units for the coming five months are given below. January 10,000 February 10,500 March 13,000 April 16,000 May 18,500 The following data pertain to production policies and manufacturing specifications used by Jango Fett: 1. Finished goods inventory on January 1 is 900 units. The desired ending inventory for each month is 20 percent of the next month's sales. 2. The data on materials used are as follows: Direct Material Per-Unit Usage Unit Cost Part #R2-D2 2 $4 Part #C-3PO Inventory policy dictates that sufficient materials be on hand at the beginning of the month to satisfy 30 percent of the next month's production needs. This is exactly the amount of material on hand on January 1. 3. The direct labor used per unit of output is one and one-half hours. The average direct labor cost per hour is $20. 4. Overhead each month is estimated using a flexible budget formula. (Activity is measured in direct labor hours.) Fixed Cost Component Variable Cost Component Supplies $1.00 Power 0.20 Maintenance 12,500 Supervision 14,000 Depreciation 45,000 Taxes 4,300 Other 86,000 1.60 3 7 1.10 5. Monthly selling and administrative expenses are also estimated using a flexible budgeting formula. (Activity is measured in units sold.) Fixed Costs Variable Costs Salaries $ 88,500 Commissions $1.40 Depreciation 25,000 Shipping 3.60 Other 137,000 1.60 6. The unit selling price of the wiring harness assembly is $110. 7. In February, Jango Fett plans to purchase land for future expansion. The land costs $68,000 8. All sales and purchases are for cash. The cash balance on January 1 equals $62,900. The firm wants to have an ending cash balance of at least $25,000. If a cash shortage develops, sufficient cash is borrowed to cover the shortage and provide the desired ending balance. Any cash borrowed must be borrowed in $1,000 increments and is repaid the following month, as is the interest due. The interest rate is 12 percent per annum. Required: Prepare a monthly operating budget for the first quarter with the following schedules: e. Overhead budget f. Selling and administrative expense budget 8. Ending finished goods inventory budget h. Cost of goods sold budget i. Budgeted income statement (ignore income taxes) j. Cash budget (See Chapter 6 Appendix)