5.25 (LO4) Preparing a cash payments budget Maria Bockman, Bates & Hill Fabricators' accounts payable manager, has just received the company's direct materials purchases budget for the first quarter (see Exercise 5.15). The company makes all of its direct materials purchases on account. Maria's recent review of the company's payment history revealed that the company pays for 25% of its direct materials purchases in the month of purchase and 75% in the month following purchase. The company expects to have an accounts payable balance of $18,000 on January 1, and this amount represents the remaining payables from December's direct materials purchases.

5.15 (LO 3) Preparing a direct materials purchases budget

Marcy Jones, Bates & Hill Fabricators'

purchasing manager, has just received the company's production budget for the first quarter (see Exercise 5.11). Each brick requires 6 pounds of clay, and Marcy expects to pay $1.50 per pound of clay in the coming year. Company policy requires an ending direct materials inventory each month that will meet 10% of the following month's production needs. Marcy expects to have 15,000 pounds of clay at a cost of $22,500 in inventory at the beginning of the year.

5.11 (LO 3) Preparing a production budget Joshua Hill, Bates & Hill Fabricators' production man-ager, has just received the company's sales budget for the first quarter (see Exercise 5.8). Company policy requires an ending finished goods inventory each month that will meet 20% of the following month's sales volume. Joshua plans to have 3,200 finished bricks at a cost of $49,280 in inventory at the beginning of the

year.

5.8 (LO 3) Preparing a sales budget

Bates & Hill Fabricators produces commemorative bricks that

organizations use for fundraising projects. Aaron Bates, the company's vice president of marketing, has prepared the following sales forecast for the first six months of the coming year. The company plans to sell the bricks for $21 each.

January

25,000

February

28,000

March

32,000

April

34,000

May

26,000

June

35,000