ABC Company makes one product and it provided the following information to help prepare the master budget for its first four months of operations:

• The budgeted selling price per unit is $70. Budgeted unit sales for June, July, August, September, October, and November are 8,400, 10,000, 12,000, and 13,000 units, 14,000 units, and 15,000 units respectively. All sales are on credit.
• 40% of credit sales are collected in the month of the sale and 60% in the following month.
• The ending finished goods inventory equals 20% of the following months unit sales.
• The ending raw materials inventory equals 10% of the following months raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $2.00 per pound.
• Thirty percent of raw materials purchases are paid for in the month of purchase and 70% in the following month. Accounts Payable balance on June 30 was $15,000. 60%
• The direct labor wage rate is $15 per hour. Each unit of finished goods requires two direct labor-hours. There is no guaranteed minimum wages.
• Variable manufacturing overhead is $3 per unit produced. Fixed manufacturing overhead is $60,000 per month, which includes $10,000 depreciation expense. There is no noncash expense items other than depreciation expense. Predetermined overhead rate is calculated based on direct labor hours every quarter (round to the nearest dollar).
• The variable selling and administrative expense per unit sold is $1.80. The fixed selling and administrative expense per month is $60,000, which includes $20,000 depreciation expense. There is no noncash expense items other than depreciation expense.
• For cash budget:
  • The companys beginning cash balance on July 1 was $38,000. The company requires a minimum cash balance of $100,000 and may borrow any amount needed from a local bank at an annual interest rate of 16% (therefore 4% quarterly). The company may borrow any amount at the beginning of any quarter and may repay its loans at the end of any quarter. Interest payments are due on any principal at the time it is repaid.
  • The company plans to pay dividends of $100,000 during July.

Prepare the following budgets:

1. Sales Budget & Schedule of Cash Collection

2. Production Budget

3. Direct materials purchase Budget & Schedule of Cash Disbursement

4. Direct Labor Budget

5. Manufacturing Overhead Budget

6. SG&A Budget

7. Cash Budget

8. Budgeted Income Statement

Please answer the FIRST 4 Questions using the following template:

	Sales Budget
	July	Aug	Sep	Quarter
Units
Unit selling price
Budgeted sales
	Schedule of expected cash collections
	July	Aug	Sep	Quarter
A/R June 30
July Sales:
Aug Sales:
Sep Sales:
Total cash collections
	Production Budget
	July	Aug	Sep	Oct
Units to be sold
Desired ending inventory
Amount to be available
Less beginning inventory
Units to be produced
	Direct materials Purchases Budget
	July	Aug	Sep	Quarter
Units to be produced
Direct materials per unit
Materials required for production
Desired ending material inventory
Total material to be available
Less beginning inventory
Total materials to be purchased
Material price per unit
Total cost of material to be purchased
	Schedule of Expected Cash Payments for Materials
	July	Aug	Sep	Quarter
Total cost of Purchases (in $)
A/P from June 30
July Purchases :
Aug Purchases:
Sep Purchases:
TOTAL cash disbursements for DM purchase
	Direct Labor Budget
	July	Aug	Sep	Quarter
Production (in units)
DLH's/Unit
Labor Hours Required
Wage rate
TOTAL DLC