Arising out of a meeting with the budget committee, it was decided that a new industrial sander and polisher equipment would be purchased on 1^st January 2020. It is expected to take most of the year to train the personnel and reorganize the production process to take full advantage of the new equipment.

In response to the issue about financing the acquisition of new equipment, George stated that the sander and polisher equipment will cost $3,000,000 with an additional cost of $100,000 for ancillary equipment. The total acquisition will be financed with a one-year loan from XIM Bank and Trust Company on 1^st January 2020. The agreement of the 16% loan is that repayment of principal and interest will be paid on 31^st December 2020.

Woodland's Company Limited is a manufacturer of wooden tables with glass tops: large and small. The firm's two products are designated as L (large table; 60 x 24 inches) and S (small table; 36 x 18 inches). The primary raw materials are lumber and glass sheets 60x30 inches. Large table requires thirteen square feet of lumber while S small wooden table requires nine square feet of lumber. Allowing for normal breakage and scrap glass, the company can get either two Small table-tops or one Large table top out of a glass sheet. Other raw materials, such as cardboard backing, are insignificant in cost and are treated as indirect materials.

Mark Murray, Chief Finance Officer, oversees the preparation of the master budget for 2020. He has gathered the following information:

1. Sales, principal budget factor, in the fourth quarter 2019 are expected to be 5,000 Large tables and 7,000 Small tables. Based on improved economic outlook, the sales manager predicts that for the next two years 2020 and 2021, sales for Small and large tables will grow by 10% each quarter over the previous quarter.

1. Woodland Company Limited sales history indicates that 70 percent of all sales are on credit, with the remainder of the sales in cash. The company's collection experience shows that 60 percent of the credit sales are collected during the quarter in which the sale is made and the remainder is collected in the following quarter.

1. Currently, the Large table sells for $1,100 each, and the Small table sells for $850 each. It is expected that prices will hold firm throughout 2020.

1. Nathaneal Samuels the production manager attempts to end each quarter with enough finished-goods inventory in each product line to cover 20 percent of the following quarter's sales. Moreover, an attempt is made to end each quarter with 25 percent of the glass sheets needed for the following quarter's production. Assume an ending inventory of 2,400 glass sheets for the fourth quarter of 2019.Lumber is purchased locally, the company buys them on a just-in-time basis; inventory is negligible.

1. All direct-material purchases are made on account, and 80 percent of each quarter's purchases are paid in cash during the same quarter as the purchase. The remainder is paid in the next quarter.

1. Indirect materials are purchased with cash as needed.Work-in-process is insignificant.

1. Projected manufacturing costs for 2020 are as follows:

Large table Small table

Direct material

Lumber:

Large: 13sq. ft. @ $20 per sq. foot $260

Small: 9sq.ft. @ $20 per sq. foot $180

Glass sheets:

Large: 1sheet @ $60 per sheet 60

Small: sheet @ $60 per sheet 30

Direct labour:

Large: 5 hours @ $40 per hour 200

Small: 3 hours @ $40 per hour 120

Manufacture overhead

0.5 direct-labour hour x $10 per hour 5____ __ 5___

Total product cost per unit $525 $335___

1. The following production overheads are budgeted for 2020.

	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter
Indirect material	102,000	112,000	122,000	132,000
Indirect labour	408,000	448,000	488,000	528,000
Other overhead	310,000	360,000	410,000	460,000
Depreciation	240,000	240,000	240,000	240,000
Total overhead costs	$1,060,000	$1,160,000	$1,260,000	$1,360,000

1. Administration and Selling overhead uses the following quarterly cost function: y=577,316+64.66X). NOTE: Round off numbers to the nearest whole number.

1. Mark anticipates for each quarter dividend of $200,000 will be declared and paid in cash.

1. Woodland's Company Limited projected balance sheet as of December 31, 2019, follows:

$

Plant, Property and Equipment (net book value) 10,000,000

Cash 731,828

Accounts receivable 3,404,500

Inventory:

Raw material 242,000

Finished goods 2,031,600

Total assets 16,409,928

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Common stock @ $1 9,000,000

Retained earnings 6,149,633

Accounts payable 1,260,295

Total liabilities and shareholders' equity 16,409,928

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Required:

Prepare Woodland Company Limited master budget for each quarter of 2020 and in total for the year by completing the following schedules and statements:

A. Sales budget (prepare 4^th quarter of 2019 as well as well as ). (8 marks)

B. Schedule of cash collected from customers. (20 marks)

C. Production budget (prepare 4^th quarter of 2019 as well as 1^st quarter of 2021). (58 marks)

D. Direct-material budget (prepare 4^th quarter of 2019 as well). (84 marks)

E.Schedule of cash disbursement to suppliers for direct material. (15 marks)

F. Direct labour budget. (28 marks)

G. Production overhead budget. (30 marks)

H. Selling and administrative budget. (Round off variable cost to 2 decimal places and fixed cost to the nearest whole number). Show regression computation. (10 marks)

I. Cash budget (52 marks)