4 Sales Budget July August September October July to Sept. Units Unit price Sales revenue LONDON Cash Collection from sales Accounts receivable Cash sales Cash from Credit sales Total cash collection 15 Accounts receivable 55% of credit sales Uncollectibles (5% of credit sales) 18 Production Budget (estimated units) Ending balance Sales Total requirement (Beginning balance/units) Production required Unit materials required (lbs.) Total materials required (lbs.) 26 Direct materials budget Ending materials balance Materials requirement (units) Total materials needs (units) (Beginning balance) Required purchase (units) Cost per unit Total cost of purchase Cash Disbursement Schedule Accounts payable Current purchases 38 Direct Labor Budget Monthly Production Labor required/unit Total labor hours Rate/hour Total labor cost 44 NOTES (if required) July August September July to Sept. Manufacturing Overhead Budget Direct labor hours Overhead absorption rate Total variable Total fixed Total Selling and Administration Budget Units sold Variable overhead cost/unit Total variable cost Fixed Capital Budget Revenue Expenses Others Cash-related Dividend payable Taxation CASH BOOK BUDGET Receipts: Beginning balance Receipts from sales Asset sale Total receipts Payments: Materials purchases Direct labor Manufacturing overhead Selling and administration costs Machinery purchase Dividend payment Income tax payment Sub-total payments Receipts less payments Bank credit (loan) Loan interest payment Loan repayment Ending Balance 1. Given the below information from the books of Major Manufacturing Company, prepare the following component budgets for the quarter July to September, 2020 only: Sales Cash Receipts from sales Production Materials Cash disbursement to suppliers Labor (wages/salaries) Manufacturing overhead Selling and administration Dividends and Taxation payable Fixed assets acquisition Cash book (No Budgeted Income Statement or Budgeted Balance Sheet required.) Sales Major Manufacturing Company budgeted sales of its only product, for the rest of 2019 is as follows: July 21,000 units, increasing by 10% monthly through October and by 20% in November and December Selling price budgeted at $8.50 per unit July to November, increasing to $9.50 per unit in December. Schedule of Cash collections. 20% of sales are for cash and the remainder is credit sales. The company collects 40% of the credit sales in the month of sale, 55% collected the following month, the remaining 5% is uncollectable. (This uncollectable is processed at point of sale). The accounts receivable balance on June 30, 2019 was $78,300. Production Budget The company desires to have inventory on hand at the end of each month equal to 20% of the following month's budgeted unit sales. On July 1, 2019 beginning inventory was 4,200 units. Direct Materials Budget 0.5 lbs. of material required per unit of product. Management plans to hold 15% of the following month's requirement as closing raw materials inventory every month. Beginning materials inventory was 1,600 pounds on June 30, 2019. Unit cost of materials is $3.40 per pound. Schedule of Cash Disbursement 60% of the month's purchases are paid for in month of purchase, and the balance paid on the following month. No discounts are available for early payment The accounts payable balance is $6,800 as at June 30, 2019. Direct Labor Budget Each unit produced requires 0.2 hrs. of direct labor Each labor hour cost $15 Labor is allocated to work according to needs. Manufacturing Overhead Budget Variable M/OH is $2 per DLH. Fixed manufacturing overhead is $35,000 per month, including $12,500 in depreciation. (Not a cash outflow). Selling and Administration Expense Budget Variable selling and administration expenses are $0.30 per unit sold. Fixed selling and administration expenses are $15,000 per month, including $3,000 in depreciation. Cash Budget 1. A line of credit is approved by company bankers, allowing the borrowing of up to $100,000, if required. All borrowing will occur at the beginning of the month, and all repayments occur at the end of the quarter. The loan interest rate is 0.75% of outstanding amount per month (9% per annum). Loan amount will be in multiple of $10,000. 2. The bank desires a cash balance of at least $20,000 at the end of each month. Beginning cash balance on 8/01, 2019 was $155,800. 3. Cash dividend of $30,000 is to be paid to stockholders in September, 2019. 4. Total equipment purchases of $120,000 are scheduled for, July $45,000 and August $75,000. No depreciation charges will be recorded until the machines are commissioned in September 1, 2019. Annual depreciation rate of 10% of cost will be charged, monthly 5. The sale of the used equipment, is estimated to fetch $25,000 cash in September, 2019. 6. The estimated income tax payment due on 7/30/2019 is $35,000. Note: 1. It is advised that you use excel spreadsheet for this work. 2. You will be marked down for poor or untidy presentation. 3. You may include supporting notes, if you think them necessary. (They are however not a requirement)