$ 4,500 $ 51,000 GA 15,200 Current Assets as of December 31 (prior year): Cash Accounts receivable, net Inventory Property, plant, and equipment, net Accounts payable Capital stock Retained earnings. $ $ 124,000 42,400 124,500 23,000 $ $ a.Actual sales in December were $70,000. Selling price per unit is projected to remain stable at $10 per unit throughout the budget period. Sales for the first five months of the upcoming year are budgeted to be as follows: January . $ 80,000 February $ 92,000 March $ 99,000 April . $ 97,000 May.......... $ 85,000 b.Sales are 30% cash and 70% credit. All credit sales are collected in the month following the sale. c.Devon Manufacturing has a policy that states that each month's ending inventory of finished goods should be 25% of the following month's sales (in units). d. Of each month's direct material purchases, 20% are paid for in the month of purchase, while the remainder is paid for in the month following purchase. Two pounds of direct material is needed per unit at $2.00 her pound. Ending inventory of direct materials should be 10% of next month's production needs. e. Most of the labor at the manufacturing facility is indirect, but there is some direct labor incurred. The direct labor hours per unit is 0.01. The direct labor rate per hour is $12 per hour. All direct labor is paid for in the month in which the work is performed. The direct labor total cost for each of the upcoming three months is as follows: January $ 996 February 1,125 March ......... $ 1,182 f. Monthly manufacturing overhead costs are $5,000 for factory rent, $3,000 for other fixed manufacturing expenses, and $1.20 per unit for variable manufacturing overhead. No depreciation is included in these figures. All expenses are paid in the month in which they are incurred. g.Computer equipment for the administrative offices will be purchased in the upcoming quarter. In January, Devon Manufacturing wil purchase equipment for $5,000 (cash), while February's cash expenditure will be $12,000 and March's cash expenditure will be $16,000 h.Operating expenses are budgeted to be $1.00 per unit sold plus fixed operating expenses of $1,000 per month. All operating expenses are paid in the month in which they are incurred. No depreciation is included in these figures. i. Depreciation on the building and equipment for the general and administrative offices is budgeted to be $4,500 for the entire quarter, which includes depreciation on new acquisitions. j. Devon Manufacturing has a policy that the ending cash balance in each month must be at least $4,000. It has a line of credit with a local bank. The company can borrow in increments of $1,000 at the beginning of each month, up to a total outstanding loan balance of $120,000. The interest rate on these loans is 1% per month simple interest (not compounded). The company would pay down on the line of credit balance in increments of $1,000 if it has excess funds at the end of the quarter. The company would also pay the accumulated interest at the end of the quarter on the funds borrowed during the quarter. k. The company's income tax rate is projected to be 30% of operating income less interest expense. The company pays $10,000 cash at the end of February in estimated taxes. Requirement 1. Prepare a schedule of cash collections for January, February, and March, and for the quarter in total. Devon Manufacturing Cash Collections Budget For the Quarter Ended March 31 Month January February March Quarter Cash sales Credits sales Total cash collections Requirement 2. Prepare a production budget. (Hint: Unit sales - Sales in dollars - Selling price per unit.) Devon Manufacturing Production Budget For the Quarter Ended March 31 Month January February March Quarter Unit sales Plus: Desired ending inventory Total needed Less: Beginning inventory Units to produce Quarter Requirement 3. Prepare a direct materials budget. (Round your answers to the nearest whole dollar.) Devon Manufacturing Direct Materials Budget For the Quarter Ended March 31 Month January February March Units to be produced Multiply by: Quantity (pounds) of DM needed per unit Quantity (pounds) needed for production Plus: Desired ending inventory of DM Total quantity (pounds) needed Less: Beginning inventory of DM Quantity (pounds) to purchase Multiply by: Cost per pound Total cost of DM purchases Requirement 4. Prepare a cash payments budget for the direct material purchases from Requirement 3. (Use the accounts payable balance at December 31 of prior year for the prior month payment in January.) (Round your answers to the nearest whole dollar.) Devon Manufacturing Cash Payments for Direct Materials Budget For the Quarter Ended March 31 Month January February March Quarter 20% of current month DM purchases 80% of last month's DM purchases Total cash payments Requirement 5. Prepare a cash payments budget for direct labor. Devon Manufacturing Cash Payments for Direct Labor Budget For the Quarter Ended March 31 Month January February March Quarter Total cost of direct labor Requirement 6. Prepare a cash payments budget for manufacturing overhead costs. (Round your answers to the nearest whole dollar.) Devon Manufacturing Cash Payments for Manufacturing Overhead Budget For the Quarter Ended March 31 Month January February March Quarter Variable manufacturing overhead costs Rent (fixed) Other fixed MOH Cash payments for manufacturing overhead Requirement 7. Prepare a cash payments budget for operating expenses. (Round your answers to the nearest whole dollar.) Devon Manufacturing Cash Payments for Operating Expenses Budget For the Quarter Ended March 31 Month January February March Quarter Variable operating expenses Fixed operating expenses Cash payments for operating expenses Requirement 8. Prepare a combined cash budget. (If an input field is not used in the table leave the input field empty, do not enter a zero. Use parentheses or a minus sign for negative cash balances and financing payments.) Devon Manufacturing Combined Cash Budget For the Quarter Ended March 31 January February March Quarter Beginning cash balance Plus: Cash collections Total cash available Less: cash payments: Direct material purchases Direct labor Manufacturing overhead costs Operating expenses Tax payment Equipment purchases Total cash payments Ending cash balance before financing Financing Plus: New borrowings Less: Debt repayments Less: Interest payments Total financing Ending cash balance Requirement 9. Calculate the budgeted manufacturing cost per unit (assume that fixed manufacturing overhead is budgeted to be $0.80 per unit for the year). (Round your answer to the nearest cent.) Devon Manufacturing Budgeted Manufacturing Cost per Unit For the Quarter Ended March 31 Direct materials cost per unit Direct labor cost per unit Variable manufacturing overhead costs per unit Fixed manufacturing overhead costs per unit Budgeted cost of manufacturing one unit Requirement 10. Prepare a budgeted income statement for the quarter ending March 31. (Hint: Cost of goods sold = Budgeted cost of manufacturing one unit * Number of units sold.) (Round your answers to the nearest whole dollar.) Devon Manufacturing Budgeted Income Statement For the Quarter Ended March 31 Sales revenue Less: Cost of goods sold Gross profit Less: Operating expenses Less: Depreciation expense Operating income Less: Interest expense Less: Income tax expense Net income