Arrangon Ltd. is a company that manufactures and sells a single product called Zoltar. For planning and control purposes they utilize a monthly master budget, which is developed in advance of the budget year. Their fiscal year end is September 30. A listing of the estimated ledger balances for the company's current year of September 30, 2024 is given below: Cash Accounts receivable Inventory-raw materials Inventory-finished goods Capital assets (net) $370,058 674,730 Accounts payable $ 719,488 420,090 Income tax payable 453,122 Capital stock 42,000 2,000,000 2,632,000 Retained earnings 1,788,512 $4,550,000 $4,550,000 The sales forecast consisted of these few lines: For the year ended September 30, 2024: 450,000 units at $42.00 each* For the year ended September 30, 2025: 475,000 units at $43.00 each For the year ended September 30, 2026: 500,000 units at $44.00 each *Sales for the year ended September 30, 2024 are based on actual sales to date and budgeted sales for the duration of the year. Your investigations of the company's records have revealed the following information: 1. Sales are seasonal with January, May, July and September being the slowest months with only 5% of sales for each month. February, March, August and December each contribute 8% to the total sales. April and June each account for 10% of total sales. Sales in October account for 13% of the total and peak at 15% in November. This pattern of sales is not expected to change in the next two years. 2. Sales are on a credit basis, with 50% collected during the month of the sale, 35% the following month, and 14% the month thereafter, with 1% of total sales considered uncollectible (bad debt expense). Sales in August and September 2024 are expected to be $1,512,000 and $945,000 respectively. Based on the above collection pattern this will 1 3. From previous experience, management has determined that an ending finished goods inventory equal to 20% of the next month's sales is required to fit potential fluctuations in demand. The finished goods inventory at September 30, 2024 is expected to be 12,350 units. 4. There is only one type of raw material used in the production of Zoltar: Zoltar Acrylic (ZAC) is a very compact material that is purchased in powder form. Each Zoltar requires 2 kilogram of ZAC, at a cost of $11.00 per kilogram. The supplier of ZAC tends to be somewhat erratic so Arrangon finds it necessary to maintain a raw materials inventory balance equal to 30% of the following month's production needs as a precaution against stock-outs. The raw material inventory at September 30, 2024 is expected to be 38,190 kilograms. 5. Arrangon pays for 35% of a month's purchases in the month of purchase, 45% in the following month and the remaining 20% two months after the month of purchase. There is no early payment discount. Beginning accounts payable will consist of $719,488 arising from the following estimated direct material purchases for August and September of 2024: ZAC purchases in August, 2024: $713,130 ZAC purchases in September, 2024 $887,480 6. Arrangon's manufacturing process is highly automated, but also requires highly skilled labour. Employees are paid at an average rate of $32.50 per hour. This rate already includes the employer's portion of employee benefits. All payroll costs are paid in the period in which they are incurred. On average, each unit spends a total of 12 minutes in production. However, due to the fluctuations in actual sales, the company maintains a workforce of 50 full-time employees who are guaranteed a minimum of 160 hours each month. During months in which production is low, these workers perform other tasks such as equipment maintenance. In months when additional workers are needed, Arrangon hires temporary workers at $32.50 per hour. For simplicity, include all labour costs in the labour budget. 7. Variable manufacturing overhead is allocated based on units produced. The variable overhead manufacturing rate is $5 per unit. 8. The fixed manufacturing overhead costs for the entire year is estimated to be $1,080,000, including depreciation of $255,000 on the existing manufacturing equipment. Fixed manufacturing overhead costs are incurred evenly over the year and paid as incurred, except for depreciation, calculated using the straight-line method of depreciation. 9. Arrangon plans to purchase new manufacturing equipment in November for which they will need to pay cash. The bid that was accepted totaled $900,000, which will be paid in 4 equal monthly instalments beginning in December 2024 with no interest. The depreciation on this additional equipment will amount to $18,000 per month, beginning in November 2024. 10. Because sales are seasonal, Arrangon must rent an additional warehouse for October and November to house the additional inventory on hand, at a cost of $30,000 per month, paid monthly. 11. Selling and administrative expenses are largely fixed and are estimated to be $1,125,000 for the year. These costs are paid in the month in which they occur, with the exception of the only non-cash item: a monthly depreciation of office equipment in the amount of $15,000. Starting from October 2024, Arrangon intends to pay salespeople a commission of $1.50 per unit sold. This cost is not included in the estimate above, nor are bad debt expenses (see point 2) or warehouse rental (see point 10). 12. Arrangon has a corporate tax rate of 30%. Outstanding income taxes from the year ended September 30, 2024 must be paid in January 2025. During the fiscal year ended September 30, 2025 Arrangon will be required to make monthly income tax installment payments of $15,000. 13. Arrangon has a policy of paying dividends at the end of each month. The President tells you that the board of directors plans to continue their policy of declaring dividends of $30,000 per month. Required: 1. Prepare a master budget for Arrangon for the year ended April 30, 2025, including the following monthly schedules: a. Sales Budget and Schedule of Cash Receipts b. Production Budget c. Direct Materials Budget and Schedule of Cash payments for raw materials purchases d. Direct Labour Budget e. Manufacturing Overhead Budget f. Selling and Administrative Expense Budget g. Cash Budget h. Cost per Unit Produced Schedule (see template) i. Income Statement (see template) and Balance Sheet Oct Nov Dec --> etc. Cost per unit produced DM 22.00 22.00 22.00 DL (Total DL for the month/units produced for the month) xx XxX xx O/H (Total O/H for the month/units produced for the month) XX XX xx XX xx Cost per unit Oct Nov Dec --> etc. Total Income statement Sales-$ XX xx xx COGS BI - from previous month COGM-units produced x cost per unit above xx XX xx xx XX XX XX El-units from production schedule x cost per unit above (xx) (xx) (xx) (xx) XX XX XX xx GM xx XX xx S&A XX xx xx Bad debts xx xx XX XX xx XX NIBT XX XX xx XX Tax (30%) XX XX NIAT XX XX xx xx