AC 436 Master Budget Assignment 10% Of grade Master Budget Assignment Metal Parts Inc . is preparing its monthly budget for 2019 . The following estimates and information are available . Each unit requires 5 hours of direct labour and 16 pounds of metal to make ." They have 5920 pounds of metal already in inventory . To prepare for supply disruptions of metal , the company likes to keep monthly ending inventory of metal high enough to meet the next two month's production requirements . In practice , their attempts at this might not always work out . Direct labour costs $23 per hour . Accounts payable are paid 60% in the month of purchase and 40% in the following month . Each pound of metal costs $10.50 In December 2018 , 6000 pounds of metal were purchased and 1. 050 hours of Direct Labour worked . Sales are estimated as follows :` Month Amount DUH per unit = November 2018 actual| $270 , 000 December actual $ 240 , 000 Jan 2019 $ 3 30 , 000 Feb $180 , 000 Mar $510 , 000 App $600 , 000 May $1 , 1 10 , 000 June $1 , 770 , 000 July $1 , 830 , 000 AUB $1 , 1 10 , 000 Sept $1 , 020 , 000 Oct $660 , 000 NOV $ 240 , 000 Dec $180 , 000 Jan 2020 $450 , 000 Feb $480 , 000 Cash Finished units Mar All sales are on account . $600 , 000 Ending inventory equal to 25% of next month's sales requirements A minimum of $2 , 000 , 000 Inventory of finished units from December 2018 is equal to the targeted inventory policy . \\Metal Parts Inc . keeps a minimum amount of the following :AC 436 Master Budget Assignment 10% of grade Selling and Administration expenses are $8 per unit and $40, 000 per month . There is no depreciation included in this figure . Dividends of $500, 000 will be paid in December . Customer collections are received 45% in the month of sale , 40% in the next month , and 13% in the second month following the sale . No further collections are received . The company uses the absorption method of costing finished goods inventory and cost of goods "sold . The allocate manufacturing overhead on the basis of direct labour hours . Where these instructions are not specific , use the same approach as the in-class example . Due to payroll processing times , half of the wages earned by workers is paid in the month of production , and the other half is paid in the following month . Metal Parts Inc . has a very flexible work force that allows them to scale up or down without cost each month . The selling price per unit is $1 , 500* Overhead is $500, 000 per month plus $2 per direct labour hour Overhead costs are all paid in the month they occur , and there is $100 , 000 per month in depreciation included . The balance sheet as at December 31 , 2018 is below : Balance Sheet Dec . 2018 Cash 2, 000 , 000 Accounts Rec 162 , 300 PM Inventory FG Inventory 62 , 160 Land 67 , 839. 14 4 , 000 , 000 Equipment Acc . Dep'n 6, 000 , 000 Total Assets 2 , 240, 000 10 , 052, 299 Accounts Pay Wages Pay 25, 200 Bank Line of Credit 12, 075 Total Liabilities 37 , 275 Common Shares Total Liab & Equity Retained Earnings depreciation because it was no longer a depreciable asset . Total Equity $750, 000 of the equipment will be sold in March . This will have no effect on monthly 10, 015, 024 5, 015 , 024 5, 000 , 000 10 , 052, 299AC 436 Master Budget Assignment 10% of grade Another $400, 000 of equipment will be purchased in June and will not be in service until 2020 . The company has a line of credit at the bank for up to $10 million at an interest rate of 4% . Borrowing happens on the first day of the month and repayments are made as soon as cash is available , at the end of each month , Interest is calculated and deducted from the bank account at the end of each month based on the loan balance outstanding . Since the interest deducted from the bank account , it is OK to allow the ending bank balance to be below the minimum by the amount of interest expense in the month . For example , if interest expense on the line of credit is $5, 000 in a month , the ending balance can be left as $1, 995, 000 after the interest is deducted ; That is close enough to the minimum for our purposes. Required : Using the Excel template provided , complete the master budget including cash projections , balance sheet and income statement . A template has been provided for you to work with . All formulas should be linked to the data input area or other cells . Direct input of numbers in the body of the document should be avoided . Submit file to dropbox by 11:59 February 6 " . Feel free to work together , but keep your work separate and submit only your own work