ABC Company is a manufacturer of Widgets. The Companys sales data for the first quarter of the upcoming year is as follows:

Budgeted Sales in units Jan 250,000; Feb 210,000; Mar 280,000; Apr 285,000; May 275,000

The selling price of each Widget is $117.

Distributors purchase Widgets on account. The percentage of sales collected in the month of sale is 55%. The percentage of sales collected in the month following the month of sale is 40%. The percentage of sales collected the second month following the month of the sale is 5%. The company doesnt have any bad debts. The accounts receivable balance at the beginning of the period is comprised of $725,000 from November Sales and $6,100,000 from December Sales.

The owner of the company realizes that excessive inventories tie up funds and create storage problems, but realizes the importance of having some inventory to fill unanticipated orders. His production manager has calculated that the ending inventory each month should be equal to 10% of the next months sales to provide an adequate cushion. The finished goods inventory at the beginning of the period was 25,000 units.

Widgets require 23 lbs of a patented plastic material per unit that the company purchases from its parent company for $1.25 per pound. The production manager has calculated that the ending inventory necessary to provide a cushion for unexpected orders needs to be 15% of the next periods production. The beginning raw materials inventory included 901,000 pounds of the patented plastic material. The company purchases raw materials on account, paying for 40% of the materials in the month of purchase, and 60% of the materials in the month following the purchase. The account payable related to materials had an account balance of $4,650,000 at the end of last year.

Each Widget requires .4 hours of direct labor for assembly. Employees are paid on an hourly basis $16 per hour. Employees at the ABC Company are hired as needed to meet demand. The owner is unwilling to hire employees through the local union because the union requires that the potential hires be guaranteed a 40 hour work week.

Jan Total Budgeted Sales in units Selling Price per Unit Total Sales Feb 250,000 117 $ 29,250,000 $ Mar 210,000 117 $ 24,570,000 $ 280,000 117 $ 32,760,000 $ Apr 1,300,000 585 $ 152,100,000 $ May 285,000 117 $ 33,345,000 $ 275,000 117 32,175,000 Schedule of Expected Cash Collections Feb Mar Total Apr May check figures Nov A/R Dec A/R Jan Feb Mar Total Cash Collections Production Budget Jan Feb Mar Total May Budgeted Sales Add Desired Ending Inventory Total Needs Less Beginning Inventory Required Production Direct Materials Budget Jan Feb Mar Total Required production in units Raw materials needed per unit (lbs) Raw materials needed to meet production Desired Raw materials ending inventory Total Raw material needs Less Raw materials beginning inventory Raw materials to be purchased Cost per Pound Total Cost of Raw materials to be purchased Schedule of Expected Cash Disbursements Jan Feb Mar Total Apr check figures Accounts payable January February March