a.Prepare Nerdzy's operating budget and cash budget for the year by quarter. Required schedules and budgets include: a.Sales budget b.Production budget c.Direct materials budget d.Direct labor budget e.Manufacturing overhead budget f.Cost of goods sold budget g.Selling and administrative expense budget h.Schedule of cash receipts i.Schedule of cash payments j.Cash budget 3 Additional Information a. Budgeted sales are 1,000 laptops for the first quarter and are expected to increase by 200 laptops per quarter. Cash sales are expected to make up 10% of total sales, the remainder will be on account. The expected sales price per computer is $70. b. Finished goods inventory on December 31, 2020, consists of 300 computers at $36 each. Dc. Desired ending finished goods inventory is 40% of the next quarter's sales; first-quarter sales for 2020 are expected to be 1,800 computers; FIFO inventory costing is used. 1 2 d. Raw Materials Inventory on December 31, 2020, consists of 750 pieces of the required component used to manufacture the laptops. 3 4e. Direct materials requirements are 2.5 pieces of material per computer. The cost of each piece is $4. 5 f. Desired ending Raw Materials Inventory is 40% of the next quarter's direct materials needed for production; desired ending inventory for December 31, 2021, is 750 computer pieces; indirect materials are insignificant and not considered for budgeting purposes. 6 7 8 g. 9 h. 10 i. 1 12 j. 43. 14 k. 15. 46 Each computer requires 0.30 hours of direct labor; direct labor costs average $20 per hour. Variable manufacturing overhead is $3 per computer. Fixed manufacturing overhead includes $6,000 per quarter in depreciation and $10,860 per quarter for other costs, such as utilities, insurance, and property taxes. Fixed selling and administrative expenses include $8,000 per quarter for salaries; $4,800 per quarter for rent; $1,950 per quarter for insurance; and $2,000 per quarter for depreciation. Variable selling and administrative expenses include supplies at 2% of sales. Capital expenditures include $25,000 for new manufacturing equipment to be purchased and paid in the first quarter. 47 m. Cash receipts for sales on account are 70% in the quarter of the sale and 30% in the quarter following the sale; December 31, 2020, Accounts Receivable is received in the first quarter of 2021; uncollectible accounts are considered insignificant and not considered for budgeting purposes. 48 49