1. Prepare the cash budget for July 2019.
2. Prepare tge budgeted income statement for July 2019.
Hansell Company's management wants to prepare budgets for one of its products, Duraflex, for July 2019. The firm sells the product for $89 per unit and has the following expected sales (in units) for these months in 2019: April 4,100 May 6,300 June 6,400 July 7,800 August 8,800 September 6,200 The production process requires 4 pounds of Dura-1000 and 2 pounds of Flexplas. The firm's policy is to maintain an ending inventory each month equal to 10% of the following month's budgeted sales, but in no case less than 500 units. All materials inventories are to be maintained at 5% of the production needs for the next month, but not to exceed 1,000 pounds. The firm expects all inventories at the end of June to be within the guidelines. The purchases department expects the materials to cost $1.25 per pound and $5.00 per pound for Dura-1000 and Flexplas, respectively, The production process requires direct labor at two skill levels. The rate for labor at the K102 level is $50 per hour and $20 per hour for the K175 level. The K102 level can process one batch of duraflex per hour; each batch consists of 100 units. The manufacturing of Duraflex also requires one-tenth of an hour of K175 workers' time for each unit manufactured. Hansell Company expects its trial balance on June 30 to be as follows: Hansell Company expects its trial balance on June 30 to be as follows: Credit $ 2.600 HANSELL COMPANY Budgeted Trial Balance June 30, 2019 Debit Cash $ 30,000 Accounts receivable 60,000 Allowance for bad debts Inventory 18,600 plant, property, and equipment 483,600 Accumulated depreciation Accounts payable Wages and malarien payable note payable Stockholders' equity Total $ 592,200 Book rences 238, 100 70,700 17,900 149,200 113,700 592,200 Typically, cash sales for Honsell represent 20% of sales while credit sales represent 80%. Credit sales terms by the company are 2/10, n/30. Hansell bills customers on the first day of the month following the month of sale. Experience has shown that 60% of the company's billings will be collected within the discount period, 25% by the end of the month after sales, 10% by the end of the second month after the sale, and 5% will ultimately be uncollectible. The company writes off uncollectible accounts after 12 months. The purchase terms for materials are 2/15, n/60. Hansell makes all payments within the discount period. Experience has shown that 80% of the purchases are paid in the month of the purchase and the remainder are paid in the month immediately following. In June 2019, the firm budgeted purchases of $18,900 for Dura-1000 and $16,500 for Flexplas. Variable manufacturing overhead is budgeted at $900 per batch (of 100 units) plus $80 per direct labor hour. In addition to variable overhead, the firm has a monthly fixed factory overhead of $37,800, of which $7,800 is depreciation expense. The firm pays all manufacturing fabor and factory overhead when incurred. Total budgeted marketing, distribution, customer service, and administrative costs for 2019 are $2,534,000. Of this amount $895,000 is considered fixed and includes depreciation expense of $90,000. The remainder varies with sales. The budgeted total sales for 2019 are $4 million. All marketing and administrative costs are paid in the month incurred. Management desires to maintain an end-of-month minimum cash balance of $30,000. The firm has an agreement with a local bank to borrow its short-term needs in multiples of $1,000 up to $100,000 at an annual interest rate of 12%. Borrowings are assumed to occur at the end of the month. Bank borrowing at July 1 is $0. Required: Using the information presented above: 1. Prepare the cash budget for July 2019. 2. Prepare the budgeted Income statement for July 2019. (Assume that the company uses a LIFO cost-flow assumption.) Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the cash budget for July 2019. (Round your answers to the nearest whole dollar amount.) Prepare the cash budget for July 2019. (Round your answers to the nearest whole dollar amount.) HANSELL COMPANY Cash Budget For July 2019 Cash balance, beginning (given) Cash flow from operations: Collections of receivables from credit sales in June: 0 Cash disbursements: Materials purchases - June Materials purchases July Prev 3 of 3 Next 0 Total cash flow from operations Investing activities: Sales of investments and other long-term assets Interest payments, end of month Purchases of investments and other long-term assets Repayment of existing debt, end of month Financing activities: $ 0 0 Cash balance, July 31, 2019 $ $ 0 Required 1 Required 2 > Prepare the budgeted income statement for July 2019. (Assume that the company uses a LIFO cost-flow assumption.) (Round per unit" to 2 decimal places and other answers to the nearest whole dollar amount.). HANSELL COMPANY Budgeted Income Statement For July 2019 Sales 0 Cost of goods sold 0 Selling and administrative expenses -- Fixed Cost per unit, July $ 0.00
