381 Chapter 9 Budgeting The balance sheet as of D ober 31, 2018. is as follows: $ 80,000 612,000 80,700 900,000 $1,672,700 Assets Cash... Accounts receivable....... Inventory: Raw materials. . . . . . . . . . . $ 8,100 Finished goods 72,600 Plant and equipment. . . . . . . . . . . . 1,000,000 Less accumulated depreciation ....... (100,000) Total assets... Liabilities and Equity Accounts payable......... 6% long-term notes payable............ Common shares ..... Retained earnings...... Total liabilities and shareholders' equity.. $24,000 900,000 735,000 13,700 $1,672,700 . All borrowing Additional information is as follows: All cash payments except purchases of raw materials are made monthly as incurred. ml borrowings occur at the beginning of each month, and all repayments occur at the end of the nth. Borrowings and repayments may occur in any amount. interest on borrowed funds is paid at the end of each month at a rate of 0.5% per month. Aimum cash balance of $30,000 is required at the end of each month. All interest on borrow A minimum cash balance Required: 1. Prepare the followi a. Sales budget. b. Production budget. the following budgets for each of the first three months of 2019: C. Raw materials purchases budget. Direct labour and manufacturing overhead budget. Selling and administrative budget. d. Direct labour and manu S. Cash budget. Prepare a budgeted contri and a budgeted balang "Eeted contribution format income statement for each of the first three months of 2019 udgeted balance sheet as at March 31, 2019. MONS (CMA, wapo) CASE 9-29 Master Budget for a Manufacturer [LO3, L04] Garneau Manufacturing Ltd. produces and distributes a special type of chemical com Compound WX. The information below about Garneau's operations has been assembled to as preparation. The company is preparing its master budget for the first quarter of 2019. The detail each month's activity and the activity for the quarter in total. The master budget will be the following information: a. Selling price is $60 per unit in 2018 and will not change for the first two quarters of 2010 and estimated sales are as follows: chemical compound called bled to assist bude of 2019. The budget ww budget will be based on Actual 2018 Estimated 2019 November: 10,000 units December: 12,000 units January: 11,000 units February: 10,000 units March: 13,000 units April: 11,000 units May: 11,000 units b. The company produces enough units each month to meet that month's sales plus a desired inven- tory level equal to 20% of next month's estimated sales. Finished Goods inventory at the end of 2018 consisted of 2,200 units at a variable cost of $33 each. The company purchases enough raw materials each month for the current month's production quirement and 25% of next month's production requirements. Each unit of product requires 5 kilo grams of raw material at $0.60 per kilogram. There were 13,500 kilograms of raw materials in inventory at the end of 2018. Garneau pays 40% of raw material purchases in the month of purchase and the remaining 60% in the following month. Each unit of finished product requires 1.25 labour-hours. The average wage rate is $16 per hour, Variable manufacturing overhead is 50% of the direct labour cost. Credit sales are 60% of total sales. The company collects 50% of the credit sales during the first month following the month of sale and 50% during the second month. Fixed overhead costs (per month) are as follows: d. e. 1. g. Factory supervisor's salary ............. Factory insurance. .... Factory rent ......... Depreciation of factory equipment ........ $75,000 1,400 8,000 1.200 h. Total fixed selling and administrative expenses are as follows: $ 300 Advertising..... Depreciation.... Insurance ... Salaries. ... Other ..... 9,000 250 4,000 14.550 And 70% of sales for i 00.000, which will be paid Variable selling and administrative expenses consist of $4 for shipping and 10 commissions. The company will acquire assets for use in the sales office at a cost of $300,000 at the end of January 2019. The monthly depreciation expense on the additional capri be $6,000. "capital assets will