Andrews Solvents Inc. raw material are generally paid in the month following that in which they are incurred. Andrews Solvents, Inc. Requirements Data Table 2023 All other expenditures are paid as incurred. Accounts receivable are usually collected Sales (gallons) 570,000 1. Andrews is concerned that the expansion of production capacity may require the $12.00 Andrews Solvents, Inc. manufactures a single product, Endless Klean (EK), a 50% in the month of sale, 50% in the month following. All sales are on credit. Fixed Selling & Admin Expenses $986,000.00 company to seek external sources of financing. Prepare a cash budget for the first quarter (includes depreciation of $36,000) cleaning solvent that removes oil based paints, lacquers and varnishes without damaging The statement of cost of goods manufactured and sold for 2023 and the 2023 Commissions (as % of Sales Dollars 5.00% of 2024 (i.e., schedule the cash inflows and outflows for the quarter). What is the amount Shipping (as % of Sales Dollars) 5.00% surfaces. It is also environmentally friendly. Endless Klean is sold only in one gallon ncome statement (both prepared in October 2023 and reflecting best available estimates Variable Manufacturing Costs (per unit): of financing that Andrews will need to arrange for the quarter? (You may find it useful Direct Materials $4.00 containers. it the time) are attached, along with some additional data Direct Labor 100 $1.00 to start by preparing a production schedule/budget for the first quarter). Variable Overhead $2.00 This year, 2023, Andrews has prospered, with projected pretax earnings of over Fixed Manufacturing Costs (total, $180,000.00 2. Andrews needs to know what income will be generated for next year. Prepare a includes depreciation of $60,000) $1.1 million on sales of $6.84 million. Management is now in the process of planning statement of budgeted cost of goods manufactured and cost of goods sold for the year Total Production (gallons) 600,000 next year's activity. The marketing department has been exploring several avenues for December's Production (gallons) 51.000 2024. Please prepare a budgeted income statement for 2024. Inventory Summary: (gallons) 2024. 2023's healthy sales resulted from a modest advertising and promotional Finished Goods Inventory, Jan 1 Finished Goods Inventory, Dec 31 21060 3. Assume that the marking department followed refers to the plan to increase the xpenditure of $188,000 spread over the year. Marketing management now believes that 51.200 marketing budget by $125,000 as Plan A. Also assume it has an alternative marketing Budgeted cash balance, Dec 31 $50,000 concerted digital media campaign in 2024 (that would increase selling and plan (Plan B) to reduce the price per gallon of Endless Klean by $1. They expect that Andrews Solvents, Inc. administrative expenses by $125,000) could substantially boost unit sales by as much as Statement of Cost of Goods Manufactured & Sold sales would increase by 20 percent over the 2023 level, even without additional levels of for the Year Ended December 31, 2023 17 percent over the year they refer to this as marketing plan A advertising expenditures. Prepare a budgeted income statement for 2024 under this Cost of Goods Manufactured The production department has also proposed a change for 2024. It has suggested Direct Materials $2,400,000.00 scenario. Direct Labor 600,000.00 hat capacity should be boosted from the current 750,000 gallons to 1.1 million gallons. Variable Overhead 1,200,000.00 4. Should Andrews accept marketing Plan A or Plan B? Please explain. Fixed Manufacturing Cost 180,000.00 The changes made for this expansion would also reduce variable manufacturing overhead $4,380,000.00 Add: to $1.95 per gallon. The cost of the expansion would be $500,000, consisting mainly of Finished Goods Inventory Jan 1 198,000.00 Total Available for Sale $4,578,000.00 quipment to be purchased in the first quarter of 2024 and to be paid for in March. This Less: Finished Goods Inventory Dec 31 (372.300.00) ncrease to plant and equipmen er a ten-year period, using the Cost of Goods Sold $4.205.700.00 straight line method with no salvage value. A full year's depreciation would be expensed Income Statement for the Year Ended December 31, 2023 in the first year. Sales $6,840,000.00 Andrews has the following policies/practices: Ending finished goods inventory less: Cost of Goods Sold (4,205.700.00 Gross Margin $2,634,300.00 generally equals one month's sales. Raw materials are purchased and delivered on a Fixed Selling & Admin Expense (986,000.00) Variable Selling & Admin Expense (547,200.00) just-in-time basis, so no inventory should exist. Payments on account of purchases of Operating Income $1.101.100.00