10 Waterways Continuing Problem Waterways Continuing Problem (This is a continuation of the Waterways Problem from Chapters 1 through 8.) WCP9 Waterways Corporation is preparing its budget for the coming year, 2014. The first step is to plan for the first quarter of that coming year. Waterways gathered the fol- lowing information from the managers. Sales Unit sales for November 2013 1 12,500 Unit sales for December 2013 102,100 Expected unit sales for January 2014 113,000 Expected unit sales for February 2014 112,500 Expected unit sales for March 2014 116,000 Expected unit sales for April 2014 125,000 Expected unit sales for May 2014 137,500 Unit selling price $12 Waterways likes to keep 10% of the next month's unit sales in ending inventory. All sales are on account. 85% of the Accounts Receivable are collected in the month of sale, and 15% of the Accounts Receivable are collected in the month after sale. Accounts receiv- able on December 31, 2013, totaled $183,780. Direct Materials Item Amount Used per Unit Inventory, Dec. 31 Metal 1 lb @ 584 per 1b. 5,177.5 Ibs Plastic 12 oz @ be per oz 3,883.125 Ibs Rubber 4 oz @ 54 per oz 1,294.375 lbs 2 lbs per unit 10,355.0 Ibs Metal, plastic, and rubber together are 754 per pound per unit. Waterways likes to keep 5% of the materials needed for the next month in its ending inventory. Payment for materials is made within 15 days. 50% is paid in the month of purchase, and 50% is paid in the month after purchase. Accounts Payable on December 31, 2013, totaled $120,595. Raw Materials on December 31, 2013, totaled 11,295 pounds. Direct Labor Labor requires 12 minutes per unit for completion and is paid at a rate of $8 per hour. Manufacturing Overhead Indirect materials 30c per labor hour Indirect labor 50c per labor hour Utilities 454 per labor hour Maintenance 254 per labor hour Salaries $42,000 per month Depreciation $16,800 per month Property taxes $ 2,675 per month Insurance $ 1,200 per month Janitorial $ 1,300 per month Selling and Administrative Variable selling and administrative cost per unit is $1.60. Advertising $15,000 a month Insurance $ 1,400 a month Salaries $72,000 a month Depreciation $ 2,500 a month Other fixed costs $ 3,000 a monthWaterways Continuing Problem 11 Other Information The Cash balance on December 31, 2013, totaled $100,500, but management has decided it would like to maintain a cash balance of at least $800,000 beginning on January 31, 2014. Dividends are paid each month at the rate of $2.50 per share for 5,000 shares outstanding. The company has an open line of credit with Romney's Bank. The terms of the agreement requires borrowing to be in $1,000 increments at 8% interest. Waterways borrows on the first day of the month and repays on the last day of the month. A $500,000 equipment purchase is planned for February. Instructions For the first quarter of 2014, do the following. (a) Prepare a sales budget. (b) Prepare a production budget. (c) Prepare a direct materials budget. (Round to nearest dollar) (d) Prepare a direct labor budget. (For calculations, round to the nearest hour.) (e) Prepare a manufacturing overhead budget. (Round amounts to the nearest dollar.) (f) Prepare a selling and administrative budget. (g) Prepare a schedule for expected cash collections from customers. (h) Prepare a schedule for expected payments for materials purchases. (Round totals to nearest dollar) (i) Prepare a cash budget.Waterway Corporation Sales Budget For the First Quarter of 20xx First Quarter January February March Quarter Expected unit sales Value Value Value Formula Title Value Cell Reference Cell Reference Cell Reference Formula Formula Formula Title Formula Waterway Corporation Production Budget For the First Quarter of 20xx First Quarter January February March Quarter Cell Reference Cell Reference Cell Reference Formula Title Value Value Value Cell Reference Title Formula Formula Formula Formula Total required units Formula Cell Reference Cell Reference Cell Reference Title Formula Formula Formula Formula Title Waterway Corporation Direct Materials Budget For the First Quarter of 20xx First Quarter January February March Quarter Cell Reference Cell Reference Cell Reference Formula Units to be produced Value Value Value Value Title Total pounds needed for production Formula Formula Formula Formula Value Value Value Cell Reference Title Formula Formula Formula Formula Total materials required Value Cell Reference Cell Reference Cell Reference Title Formula Formula Formula Title Formula Value Value Value Value Title Formula Formula Formula Formula Total Cost of direct materials purchasesWaterway Corporation Direct Labor Budget For the First Quarter of 20xx First Quarter January February March Quarter Cell Reference Cell Reference Cell Reference Formula Title Value Value Title Value Value Total required direct labor - hours Formula Formula Formula Formula Value Value Value Value Title Total direct labor costs Formula Formula Formula Formula Waterway Corporation Manufacturing Overhead Budget For the First Quarter of 20xx First Quarter January February March Quarter Variable Costs Title Formula Formula Formula Formula Formula Title Formula Formula Formula Title Formula Formula Formula Formula Title Formula Formula Formula Formula Formula Formula Formula Title Formula Fixed Costs Formula Title Value Cell Refer Cell Reference Title Value Cell Reference Cell Reference Formula Title Value Cell Reference Cell Reference Formula Value Cell Reference Formula Title Cell Reference Title Value Cell Reference Cell Reference Formula Fixed manufacturing overhead Formula Formula Formula Formula Title Formula Formula Formula Formula Cell Reference Cell Reference Cell Reference Total manufacturing overhead Cell Reference Direct labor hours Cell Reference Cell Reference Cell Reference Formula Predetermined overhead rate for the quarter Formula Waterway Corporation Selling and Administrative Expense Budget For the First Quarter of 20xx First Quarter January February March Quarter Cell Reference Cell Reference Formula Budget sales in units Cell Reference Value Cell Reference Cell Reference Cell Reference itle Formula Formula Formula Title Formula Fixed expenses: Value Cell Reference Cell Reference Formula Title Value Cell Reference Cell Reference Formula Title Title Value Cell Reference Cell Reference Formula Title Value Cell Reference Cell Reference Formula Cell Reference Formula Title Value Cell Reference Title Formula Formula Formula Formula Formula Formula Formula Total S&A expenses FormulaSchedule of Expected Collections from Customers January February March Accounts Receivable, 12/31/13 Value Title Formula Formula Title Formula Formula Title Formula Total cash collections Formula Formula Formula Schedule of Expected Payment for Direct Materials January February March Quarter Accounts Payable, 12/31/13 Value Formula Formula Formula Formula Title Formula Formula Formula Title Formula Formula Title Total payments Formula Formula Formula Formula Waterway Corporation Cash Budget For the First Quarter of 20xx First Quarter January February March Quarter Cell Reference Beginning cash balance Value Cell Reference Cell Reference Add: Receipts Title Cell Reference Cell Reference Cell Reference Formula Formula Formula Formula Formula Total available cash Less: Disbursements Formula Formula Formula Title Formula Cell Reference Cell Reference Cell Reference Formula Title Formula Formula Formula Formula Title Formula Formula Formula Formula Title Value Formula Equipment Purchase Title Value Cell Reference Cell Reference Formula Total disbursements Formula Formula Formula Formula Excess (deficiency) of available cash over cash Formula Formula Formula Formula disbursements Financing: Formula Title Value Cell Reference Formula Title Formula Formula Interest Formula Ending cash balance Formula Formula Formula