$$ All other $$cash$-$related$$ fixed manufacturing overhead costs are incurred evenly over the year and paid as incurred.

$$ Sharpen uses the straight$-$line method of depreciation.

$9.$ Selling and administrative expenses have historically been a mixed cost; Previous year$$s experience has provided the following information: $.$

Lowest level of sales: $80,000$ units

Total Operating Expenses: $$876,000$

Highest level of sales:$120,000$ units

Total Operating Expenses: $$1,116,000$

The annual amount of depreciation on office furniture and equipment is only $$21,000$and this amount is already included in the fixed portion of the selling and administration expenses. Not included in the above expenses is bad debt expense. Payments for selling and administrative expenses occur in the month in which they are incurred.

$10.$ Sales are on a cash and credit basis, with $70\%$ collected during the month of the sale, $20\%$ the following month, and $9\mathrm{.}5\%$ the month thereafter. $(1)/(2)$ of $1\%$ of sales are considered uncollectible $($bad debt expense$).$

$11.$ Sales in November and December $2022$ are expected to be $$712,500$ and $$950,000$ respectively. Based on the above collection pattern this will result in Accounts Receivable of $$347,938$ at December $31,2022$ which will be collected in January and February, $2023.$

$12.$ During the fiscal year ended December $31,2023,$ Sharpen will be required to make monthly income tax installment payments of $$5,000.$ Outstanding income taxes from the year ended December $31,2022$ must be paid in April $2023.$ Income tax expense is estimated to be $30\%$ of net income. Income taxes for the year ended December $31,2023,$ in excess of installment payments, will be paid in April, $2024.$

$13.$ An arrangement has been made with the local bank that if Sharpen maintains a minimum balance of $$20,000$ in their bank account, they will be given a line of credit at a preferred rate of $6\%$ per annum. All borrowing is considered to happen on the first day of the month, repayments are on the last day of the month. All borrowings and repayments from the bank should be in multiples of $$1,000$ and interest must be paid at the end of each month. Interest is calculated on the balance at the beginning of the month, which includes any amounts borrowed that month.

$14.$ A listing of the estimated balances in the company$$s ledger accounts as of December $31,2022$ is given below:

Assets

Cash $ $83,214$

Accounts receivable $347,938$

Inventory$-$raw materials $($Soi$)15,750$

Inventory$-$finished goods $22,365$

Prepaid Insurance $46,000$

Capital assets $($net$)724,000$

Goodwill $1000$

Total assets $$1,240,267$

Liabilities and Shareholders$$ Equity

Accounts payable $ $96,210$

Income taxes payable $22,500$

Capital stock $1,000,000$

Retained Earnings $121,557$

Total liabilities and shareholders$$ equity $$1,240,267$:

INSTRUCTIONS:

$1.$ Prepare a monthly master budget for Sharpen for the year ended December $31,2023,$ including the following schedules:

Sales Budget

Schedule of Cash Receipts $($cash collections$)$

Production Budget

Direct Materials Budget

Schedule of Cash Disbursements

Manufacturing Overhead Budget

Ending Finished Goods Inventory Budget

Selling and Administrative Expense Budget

Cash Budget

$$

to be done in Excel only