Slaggs, Inc., manufactures and sells snowboards. Slaggs manufactures a single model, the Pipex. In late 2017, Slaggs's management accountant gathered the following data to prepare budgets for January 2018: (Click the icon to view the budgeted balances and additional information pertaining to the cash budget.) (Click the icon to view the additional variable and fixed manufacturing cost information.) Requirement 1. Prepare a cash budget for January 2018. Show supporting schedules for the calculation of collection of receivables and payments of accounts payable, and for disbursements for fixed manufacturing and nonmanufacturing overhead. Begin by preparing the supporting schedule for the calculation of collection of receivables. Schedule of Cash Collections (Click the icon to view the materials and labor requirements, the direct materials inventories, and additional inventory information.) (Click the icon to view the following selected January 2018 budgets: Revenue, Direct material purchases, Direct manufacturing labor cost, Variable manufacturing overhead and Ending inventory.) Read the requirements. From December 2017 sales From January 2018 sales Total collections Data Table Budgeted balances at January 31, 2018 are as follows: Cash Accounts receivable Inventory Property, plant, and equipment (net) Accounts payable Long-term liabilities Stockholders' equity $ Selected budgeted information for December 2017 follows: Cash balance, December 31, 2017 $ Budgeted sales Budgeted materials purchases ? ? ? 858,000 18,000 1,655,000 780,000 ? 186,000 ? - X Customer invoices are payable within 30 days. From past experience, Slaggs's accountant projects 45% of invoices will be collected in the month invoiced, and 55% will be collected in the following month. Accounts payable relates only to the purchase of direct materials. Direct materials are purchased on credit with 30% of direct materials purchases paid during the month of the purchase, and 70% paid in the month following purchase. Fixed manufacturing overhead costs include $42,000 of depreciation costs and fixed nonmanufacturing overhead costs include $7,000 of depreciation costs. Direct manufacturing labor and the remaining manufacturing and nonmanufacturing overhead costs are paid monthly. All property, plant, and equipment acquired during January 2018 were purchased on credit and did not entail any outflow of cash. There were no borrowings or repayments with respect to long-term liabilities in January 2018. On December 15, 2017, Slaggs's board of directors voted to pay a $190,000 dividend to stockholders on January 31, 2018. More Info - X Variable manufacturing overhead is $18 per direct manufacturing labor-hour. There are also $60,000 in fixed manufacturing overhead costs budgeted for January 2018. Slaggs combines both variable and fixed manufacturing overhead into a single rate based on direct manufacturing labor-hours. Variable marketing costs are allocated at the rate of $330 per sales visit. The marketing plan calls for 42 sales visits during January 2018. Finally, there are $39,000 in fixed nonmanufacturing costs budgeted for January 2018. Data Table Direct materials Wood Fiberglass Direct manufacturing labor Materials and Labor Requirements Wood Fiberglass Slaggs' CEO expects to sell 3,700 snowboards during January 2018 at an estimated retail price of $960 per board. Further, the CEO expects 2018 beginning inventory of 500 snowboards and would like to end January 2018 with 800 snowboards in stock. Other data include: 15 board feet (b.f.) per snowboard 13 yards per snowboard 3 hours per snowboard Direct Materials Inventories Beginning Inventory 1/1/2018 2,080 b.f. 1,080 yards Wood Fiberglass Direct manufacturing labor $ $ $ Ending Inventory 1/31/2018 1,580 b.f. 2,080 yards 2017 Unit Price 36.00 per b.f. 12.00 per yard 32.00 per hour $ $ $ 2018 Unit Price 38.00 per b.f. 13.00 per yard 33.00 per hour The inventoriable unit cost for ending finished-goods inventory on December 31, 2017, is $175.00. Assume Slaggs uses a FIFO inventory method for both direct materials and finished goods. Ignore work in process in your calculations. X Reference Snowboards Physical Units Budget To be used in production Purchases Add target ending inventory Total requirement Deduct beginning inventory Purchases to be made Cost Budget Revenue Budget For January 2018 Units Selling price 3,700 $ Direct Materials Purchases Budget For January 2018 Wood 960 $ 60,000 b.f. 1,580 b.f. 61,580 b.f. 2,080 b.f. 59,500 $ 2,261,000 Materials Total revenues b.f. 3,552,000 Fiberglass 52,000 yards 2,080 yards 54,080 yards 1,080 yards 53,000 yards $ 689,000 Direct Manufacturing Labor Costs Budget Total $ 2,950,000 X Snowboards Total labor hours 12,000 Output Units Produced 4,000 X Direct Manufacturing Labor Costs Budget For January 2018 Total Hours 12,000 Direct materials Wood Fiberglass DMLH per Unit 3 x Variable manufacturing overhead rate = Variable manufacturing overhead costs 18 $ 216,000 Finished goods Snowboard Total ending inventory Ending Inventories Budget For January 2018 Quantity 1,580 2,080 800 Hourly Wage Rate $ $ 33 Cost per unit $ 38 13 907 $ $ Total $ 396,000 Total 60,040 27,040 725,600 812,680 Hi 1. 2. 3. 4. Requirements - X Prepare a cash budget for January 2018. Show supporting schedules for the calculation of collection of receivables and payments of accounts payable, and for disbursements for fixed manufacturing and nonmanufacturing overhead. Slaggs is interested in maintaining a minimum cash balance of $90,000 at the end of each month. Will Slaggs be in a position to pay the $190,000 dividend on January 31? Why do Slaggs's managers prepare a cash budget in addition to the revenue, expenses, and operating income budget? Prepare a budgeted balance sheet for January 31, 2018 by calculating the January 31, 2018 balances in (a) cash (b) accounts receivable (c) inventory (d) accounts payable and (e) plugging in the balance for stockholders' equity.