4- Chapter 10 Locus Manufacturing, located in Montreal, has projected sales in units for four months of the first year of operations as follows: January 35,000 Units February 40,000 Units March 50,000 Units April 30,000 Units May 40,000 Units re The product sells for $40 per unit. Thirty percent of the customers are expected to pay in the month of sale and take a 3% discount; 70% are expected to pay in the month following sale. It takes 4 kilograms of materials to produce a unit of product. The materials cost $2 per kilogram. In January, no raw materials are in beginning inventories, but managers want to end each month with enough materials for 20% of the next month's production. The firm pays for 40% of its materials purchases in the month of purchase and 60% in the following month. It takes one hour of labour to produce each unit. Labour is paid $15.00 per hour and is paid in the same month as worked. Overhead is estimated to be 5.00 per unit plus $20,000 per month (including amortization of $8,000). Overhead costs are paid as they are incurred. Locus will begin January with no finished goods or work-in-process inventory. The managers want to end each month with 25% of the following month's sales in finished goods inventory. They will end each month with no work in process. Instructions 1. Prepare the following budgets for January, February, and March (first quarter). a. Sales (1.5 Marks) b. Production. (3 Marks) c. Direct Materials Purchases. (6 Marks) 2. Prepare schedules for the expected collections from customers during February. (2 Marks) 3. Prepare schedules for the expected payments for direct materials purchases during February. (2 Marks) 4. Prepare a cash budget listing cash receipts and disbursements for the month of February only and the ending balance of cash. The firm will begin February with a cash balance of $80,000. (5.5 Marks)