1Sales are seasonal with the peak months being summer and winter holidays. Thefollowing table shows expected distribution of sales for each month based on percentage of the total budgeted sales. Months Percentage of sales Jan, Feb, Mar 3%eachApr,Aug,Sept5%eachMay,Jun,Jul10%eachOct11%Nov15%Dec20%22/6

2. From previous experience, management has determined that an ending inventory equalto20%of thenext monthssales isrequired tofitthe buyersdemands.

3. There are 2 types of raw material used in the production of Bleu:

Notsoi is the first component, and is purchased in powder form. EachBleu requires 0.5 kilograms of Notsoi, at a cost of $30.00 per

kilogram. Because the supply of Notsoi is unpredictable, Cordon findsit necessary to maintain an inventory balance equal to 40% of the followingmonthsproductionneedsasaprecautionagainststockouts.

Kanraku is the second component, of which 2 are used in the assemblyprocessperBleu.Inordertoensurethismaterialisalwaysavailable, Cordon has made a JIT agreement with the supplier which includes on-time and quality assurances. Each Bleu uses 2 Kanraku, which cost $1.00 each.

4. Thebeginningaccountspayable(associatedwithNotsoipurchasesonly)willconsistof $95,700 arising from the following estimated material purchases for November andDecember of 2022: Material purchases in November 2022: $193,150Material purchases in December 2022: $134,475

Cordonpaysfor50%ofamonths purchasesinthemonthofpurchase,35% inthe following month and the remaining 15% two months after the month of purchase. Thereis no early payment discount.

5. The manufacturing process for Bleu is divided into two activities. The first step is theforming process, during which the Notsoi is heated and moulded into various shapes.During the next stage, Kanraku is fitted into the moulded Notsoi. This step is referredto as the assembly stage.

6. The first two steps of the manufacturing process are highly automated, so the only employees are three supervisors, who are trained to operate the equipment and makerepairs as required. The supervisors work shifts, allowing the plant to operate forlonger hours during the busier months. They are also responsible for managing the

employees who work in the finishing department. There is no labourcomponent tothe manufacturing process

7. The combined unit variable overhead manufacturing rate for forming and assembly is $6.50, consisting of: Utilities--$3.00; Indirect Materials--$1.00; Plantmaintenance--$1.50;environmentalfee--$0.70; andOther--$0.30.

8. FixedManufacturingOverheadcostsfortheentireyearareasfollows:Traininganddevelopment $ 43,620 Supervisorssalary269,400

Depreciation on equipment 178,800Insurance 69,000 Other117,600

$678,420Total

TheannualinsurancepremiumispaidatthebeginningofSeptembereachyear.Thereshouldbe no change inthe premium from last year. All other cash-related fixed manufacturing overhead costs are incurred evenly overthe year and paid as incurred. Cordon uses the straight-line method of depreciation.

9. Selling and administrative expenses have historically been a mixed cost; Previousyearsexperience has provided the following information:.

Lowest level of sales: 80,000 unitsTotalOperatingExpenses:$876,000Highest level of sales:120,000 units TotalOperatingExpenses:$1,116,000

Theannualamountofdepreciationonofficefurnitureandequipmentisonly$21,000andthisamount is already included in the fixed portion of the selling and administration expenses. Notincluded in the above expenses is bad debt expense. Payments for selling and administrative expenses occur in the month in which they are incurred.

10. Sales are on a cash and credit basis, with 70% collected during the month of the sale,20%thefollowing month,and 9.5%themonth thereafter. of1% ofsalesare considered uncollectible (bad debt expense).

11. Sales in November and December 2022 are expected to be $712,500 and $950,000respectively.Basedontheabovecollectionpatternthiswill resultinAccounts

Receivable of $347,938 at December 31, 2022 which will be collected in January andFebruary,2023.

12. During the fiscal year ended December 31, 2023, Cordon will be required to makemonthly income tax installment payments of $5,000. Outstanding income taxes fromthe year ended December 31, 2022 must be paid in April 2023. Income tax expense isestimated to be 30% of net income. Income taxes for the year ended December 31,2023, in excess of installment payments, will be paid in April, 2024.

13. An arrangement has been made with the local bank that if Cordon maintains aminimum balance of $20,000 in their bank account, they will be given a line of creditat a preferred rate of 6% per annum. All borrowing is considered to happen on the first day of the month, repayments are on the last day of the month. All borrowingsandrepaymentsfromthebankshouldbeinmultiplesof$1,000andinterestmustbe paid at the end of each month. Interest is calculated on the balance at the beginning ofthe month, which includes any amounts borrowed that month.

14. AlistingoftheestimatedbalancesinthecompanysledgeraccountsasofDecember31, 2022 is given below:

Assets

Cash $ 83,214

Accounts receivable 347,938

Inventory-raw materials (Notsoi) 15,750Inventory-finished goods 22,365 Prepaid Insurance 46,000Capital assets (net) 724,000Goodwill 1000 Totalassets$1,240,267

Liabilities and Shareholders EquityAccounts payable $ 96,210 Income taxes payable 22,500Capital stock 1,000,000 Retained Earnings 121,557

Totalliabilitiesandshareholdersequity$1,240,267:

INSTRUCTIONS:

1. Prepare a monthly master budget for Cordon for the year ended December 31, 2023,including the following schedules:

Sales Budget

Schedule of Cash Receipts (cash collections)Production Budget

Direct Materials BudgetSchedule of Cash DisbursementsManufacturingOverheadBudget Ending Finished Goods Inventory BudgetSelling and Administrative Expense BudgetCash Budget