-41. Risk Management in a Manufacturing Organization Required Continuing problem P22-40, management is concerned that their supplier of raw materials will have a strike. Determine the budget implications if management plans to increase the January-end raw materi als inventory to 130 percent of February's production needs. Offer any recommendations you believe appropriate. P22-40. Developing a Master Budget for a Manufacturing Organization Cubs Incorporated manufactures a product with a selling price of $60 per unit. Units and monthly cost second quarter ending June 30, 2017. nce sheet as of June 30, 2017 LO4 data follow: Variable: Selling and administrative. Direct materials... Direct labor... Variable manufacturing overhead Fixed: Selling and administrative.... Manufacturing (including depreciation of $11,000) $ 5 per unit sold 12 per unit manufactured 12 per unit manufactured 6 per unit manufactured $17,000 per month 34,000 per month Cubs Inc. pays all bills in the month incurred. All sales are on account with 50 percent collected the month of sale and the balance collected the following month. There are no sales discounts or bad debts. Cubs Inc. desires to maintain an ending finished goods inventory equal to 20 percent of the follow- ing month's sales and a raw materials inventory equal to 10 percent of the following month's produc- tion. January 1, 2017, inventories are in line with these policies. Actual unit sales for December and budgeted unit sales for January, February, and March of 2017 Module 22 Operational Budgeting and Profit Planning are as follows: CUBS INCORPORATED Sales Budget For the Months of January, February, and March 2017 Month December January February Sales-Units. ...... 11,250 10,000 15,000 Sales-Dollars $675,000 $600,000 $900,000 March 13,000 $780,000 . Additional information: The January 1 beginning cash is projected as $6,000. For the purpose of operational budgeting, units in the January inventory of finished goods are valued at variable manufacturing cost. Each unit of finished product requires one unit of raw materials. Cubs Inc. intends to pay a cash dividend of $12,000 in January Required a. A production budget for January and February. b. A purchases budget in units for January. c. A manufacturing cost budget for January. d. A cash budget for January e. A budgeted contribution income statement for January. 1. Risk Management in a Manufacturing Organization D