ACC 201: PRINCIPLES OF MANAGERIAL ACCOUNTING DETAILS OF GROUP PROJECT This group project requires the use of EXCEL spreadsheets to prepare various budgets for a manufacturing company. For this purpose the class is asked to form groups of 3-4 students and allocate the task among them equitably. It is important that all participants contribute to the effort and share the overall task. All the facts and figures about the company's operations are supplied below: Sprinkler Corporation produces plastic garden sprinklers. The company is preparing its budget for 2021. The first step is to plan for the first quarter of that coming year. Sprinkler has collected the following information from the managers. 1. Sales: Sales for November 2020 112,500 units Sales for December 2020 102,100 units Expected sales for January 2021 113,000 units Expected sales for February 2021 112,500 units Expected sales for March 2021 116,000 units Expected sales for April 2021 125,000 units Expected sales for May 2021 137,500 units Selling price per unit Sprinkler likes to keep 10% of next month's unit sales in ending inventory. All sales are on credit. 85% of the accounts receivable are collected in the month of sale and 15% of the accounts receivable are collected in the month after sale. Accounts receivable on December 31, 2020, totaled $183,780. 2. Direct Materials: 2 pounds of direct materials is needed to produce one unit. Sprinkler likes to keep 5% of the materials needed for the next month's production in its ending inventory. Raw materials on hand on December 31, 2020, totaled 11,295 pounds. Direct materials cost is $1.15 per pound. Payment for materials is made within 15 days. 50% is paid in the month of purchase, and 50% is paid after the month of purchase. Accounts payable on December 31, 2020, totaled S120,595. 3. Direct Labor Labor requires 12 minutes per unit for completion and is paid at a rate of S8 per hour. S12 4. Manufacturing Overhead Indirect materials $0.30 per labor hour Indirect labor $0.50 per labor hour Utilities S0.45 per labor hour Maintenance $0.25 per labor hour Factory supervisor's salary $42,000 per month Factory Depreciation $16,800 per month Property taxes $ 2,675 per month Insurance $ 1,200 per month Repairs $ 1,300 per month 5. Selling and Administrative expenses Salaries $72,000 per month Advertising $15,000 per month Insurance $ 1,400 per month Office Depreciation $ 2,500 per month Other fixed costs $3,000 per month Other Information The cash balance on December 31, 2020, totaled $100,500, but management has decided it would like to maintain a cash balance of at least $800,000 beginning on January 31, 2021. Dividends are paid each month @ $2.50 per share for 5,000 shares. The company has an open line of credit with national Bank. The terms of the agreement require borrowing to be in the increments of $1,000, and the interest rate is 8%. Sprinkler borrows on the first day of the month and repays on the last day of the month if possible. A $500,000 equipment purchase is planned for February 2021. Required: Do the following for the first quarter (January, February & March) of 2021 by using EXCEL spreadsheet: (a) Prepare a Sales Budget (b) Prepare a Production Budget (c) Prepare a Direct Materials Purchase Budget (d) Prepare Direct Labor Budget (e) Prepare manufacturing Overhead Budget (1) Prepare Selling and Administration Budget (g) Prepare Schedule of expected cash collections from customers (h) Prepare a schedule for expected cash payments for materials purchases Prenare a cash Budaet