1. Prepare a monthly master budget for Tyler for the year ended December 31, 2018, including the following schedules: Sales Budget & Schedule of Cash Receipts Production Budget Direct Materials Budget & Schedule of Cash Disbursements Direct Labour Budget Manufacturing Overhead Budget Ending Finished Goods Inventory Budget Selling and Administrative Expense Budget Cash Budget 2. Prepare a monthly budgeted income statement for the year ended December 31, 2018. Include a total column that gives the total budgeted income statement for the year ended December 31, 2018.

1. Their sales forecast: For the year ended December 31, 2017: 190,000 units at $25.00 each* For the year ended December 31, 2018: 200,000 units at $25.00 each For the year ended December 31, 2019: 210,000 units at $25.00 each *Expected sales for the year ended December 31, 2017 are based on actual sales to date and budgeted sales for the duration of the year.

2. Sales are seasonal with the peak months being the summer months and Christmas season. The following table shows expected distribution of sales for each month based on percentage of the total budgeted sales. Months Percentage of sales Jan, Feb, Mar 4% each Apr, Aug, Sept 5% each May, Jun, Jul & Oct 8% each Nov 16% Dec 25%

3. Sales are on a cash and credit basis, with 55% collected during the month of the sale, 35% the following month, and 9.5% the month thereafter. of 1% of sales are considered uncollectible (bad debt expense).

4. From previous experience, management has determined that an ending inventory equal to 30% of the next months sales is required to meet the buyers demands.

5. Because sales are seasonal, Tyler must rent an additional storage facility for October and November to house the additional finished goods inventory on hand. The only related cost is a flat $15,000 per month, payable at the beginning of the month. 6. There are three types of raw material used in the production of Gadgets. Material #1 (Won) is a material purchased in powder form. Each Gadget requires 0.75 kilograms of Won, at a cost of $10.00 per kilogram. The supplier of Won tends to be somewhat erratic so Tyler finds it necessary to maintain an inventory balance equal to 50% of the following months production needs as a precaution against stock-outs. Material #2 (Too) is purchased from an outside supplier. It is attached during the assembly process. For a small premium, Tyler has made a JIT agreement with the supplier which includes on-time and quality assurances. Each Gadget uses three (3) units of Too, which cost $0.50 each. The supplier of Too is paid in the month the product is supplied. The final component for the toy is a length of rope which is used to pull the Gadget. The rope is supplied by a student entrepreneur, who must be paid in cash. On the first day of every month she delivers exactly the right amount to manufacture the budgeted number of units for that month. It costs $1.60 per meter and Tyler uses one-quarter meter for each Gadget.

7. Accounts payable consists of WON purchases only. Tyler pays for 30% of a months purchases in the month of purchase, 35% in the following month and the remaining 35% two months after the month of purchase. There is no early payment discount.

8. The manufacturing process for Gadgets is divided into three separate activities; forming, assembly and finishing. a. The forming process is where WON is formed into several shapes that snap together to make the Gadget. b. During the assembly stage, the shapes are fused together. The forming and assembly stages of the manufacturing process are highly automated, so the only employees are three supervisors, who are trained to operate the equipment and make repairs as required. The supervisors work shifts, allowing the plant to operate for longer hours during the busier months. They are also responsible for managing the employees who work in the finishing department c. The finishing stage is where the wheel and the pull rope are attached and the Gadget is prepared for shipping. This is the only part of the manufacturing process that employs direct labour. Most of the staff work on a part-time basis, so their hours can be set based on production requirements. This also eliminates the need for overtime. These employees are paid based on the number of units produced. They receive an average of $18.00 per hour including employee benefits. Each Gadget spends 12 minutes in the finishing department

9. Because of the large difference in the manufacturing stages, Tyler uses two separate variable manufacturing overhead rates. The forming and assembly departments use similar equipment and with the companys concentration on a single product, the manufacturing overhead is allocated based on volume (i.e. the units produced). The combined unit variable overhead manufacturing rate for forming and assembly is $3.25, consisting of: Utilities--$1.50; Indirect Materials--$0.50; Plant maintenance-- $0.75; environmental fee--$0.35; and Other--$0.15. The best cost driver for the finishing department is considered to be direct labour hours. Here the predetermined variable manufacturing overhead is expected to be $2.05 per hour.

10. Fixed manufacturing overhead costs are not separated between departments. The total costs for the entire year are as follows: Training and development $ 43,200 Property and business taxes 39,000 Supervisors salary 269,400 Amortization on equipment 178,800 Insurance 96,000 Other 117,600 $ 744,000 The property and business taxes are paid in one lump sum on June 30 of each year. The expected payment for next year (2018) is $39,600. The annual insurance premium is paid at the beginning of September each year. There should be no change in the premium for 2018, it should be the same as 2017. All other cash-related fixed manufacturing overhead costs are incurred evenly over the year and paid as incurred. Tyler uses the straight line method of amortization.

11. Selling and administrative expenses are known to be a mixed cost; however, there is a lot of uncertainty about the portion that is fixed. Previous years experience has provided the following information (rounded): Lowest level of sales: 140,000 units Total Operating Expenses: $778,200 Highest level of sales: 220,000 units Total Operating Expenses: $1,023,000 The annual amount of amortization on office furniture and equipment is only $24,000and this amount is not included in the fixed portion of the selling and administration expenses. Also not included in the above expenses is bad debt expense. Payments for selling and administrative expenses occur in the month in which they are incurred.

12. During the fiscal year ended December 31, 2018, Tyler will be required to make monthly income tax instalment payments of $5,000. Outstanding income taxes from the year ended December 31, 2017 must be paid in April 2018. Income tax expense is estimated to be 25% of net income. Income taxes for the year ended December 31, 2016, in excess of instalment payments, will be paid in April, 2019. Notes: Income tax instalments are required of corporations that owed tax to IRS in the prior year (just like how as a personal tax payer you pay tax with each paycheque, companies are required to remit an amount monthly if they paid tax in the prior year). Instalments are calculated based on the amount owed from the prior year. When paid, companies usually put the amount into a balance sheet account called income tax receivable/payable. Once the amount of income tax owed for the year is calculated (usually after year end) the company is able to calculate any remaining amount owed to or receivable from IRS as this should be the remaining balance in the income tax receivable/payable account.

13. Tyler is planning to acquire additional manufacturing equipment for $306,000 in February, 2018. They have a special agreement to pay the supplier in three equal instalments: in May, July and September. The manufacturing overhead costs shown above already include the amortization on this equipment.

14. An arrangement has been made with the local bank to have a line of credit at an interest rate of 8% per annum. All borrowing is considered to happen on the first day of the month, repayments are on the last day of the month. Interest must be paid at the beginning of the following month. Interest is calculated on the balance on the 2nd last day of the month, which includes any amounts borrowed but not repaid that month.

15. Tyler Ltd. requires a minimum cash balance on hand at all times of $5,000.

16. Tyler Ltd. has a policy of paying dividends at the end of each calendar quarter. The CEO tells you that the board of directors is planning on continuing their policy of declaring dividends of $50,000 per quarter.

17. A listing of the estimated balances in the companys ledger accounts as of December 31, 2017 is given below: Assets Cash $ 83,365 Accounts receivable 490,438 Inventory-raw materials (WON) 15,000 Inventory-finished goods 31,950 Prepaid Insurance 64,000 Prepaid property and business taxes 19,200 Capital assets (net) 724,000 Total assets $1,427,953 Liabilities and Shareholders Equity Accounts payable $ 112,481 Income taxes payable 22,500 Capital stock 1,000,000 Retained Earnings 292,971 Total liabilities and shareholders equity $1,427,953