As part of the continued advancement of technology, a drone camera market has emerged in recent years. The drone camera market has been growing as more photography enthusiasts have begun adopting this high$-$tech approach to capturing still images and video using remotely controlled devices. Eager to capture a share of this growing market, CamDrone entered the market in early $2018.$ CamDrone manufactures camera drones, selling primarily to retailers.

CamDrone is pleased with its financial performance over its first few years of operations and optimistic about achieving continued financial success. For planning and control purposes the company utilizes a monthly Master Budget, which is usually developed at least three months in advance of the budget year. The company has a fiscal year ending December $31.$

It is now Sept $15,2019.$ You have been asked to prepare the Master Budget for the year ending December $31,2020.$

Based on your discussions with the various departments throughout the company, you have collected the following relevant information for preparing the budget:

Sales

$1.$ The marketing department is forecasting the following annual sales:

$$ For the year ended December $31,2019$: $9,000$ units at $$1,000$ each$*$

$$ For the year ended December $31,2020$: $10,000$ units at $$1,000$ each

$$ For the year ended December $31,2021$: $15,000$ units at $$1,000$ each

$*$Expected sales for the year ended December $31,2019$ were based on actual sales to date and budgeted sales for the duration of the year.

$2.$ Peak months for sales generally correspond with summer weather and gift$-$giving holidays. History shows that January is the slowest month, with only $1\%$ of annual sales, followed closely behind by Feb$-$April with $2\%$ of annual sales for each month. Sales spike during summer months with May, June, July, and August contributing $12\%,15\%,12\%,$ and $10\%$ of annual sales respectively. With the back$-$to$-$school focus in September, there is a significant dip in camera drone sales to $3\%$ of annual sales. As Christmas shopping picks up momentum, winter sales increase to $8\%$ in October, $13\%$ in November, and then peak at $20\%$ in December. This pattern of sales is not expected to change in the next two years.

Manufacturing Costs and Inventory

$3.$ Each camera drone requires a total of $3\mathrm{.}5$ hours for production.

$4.$ Due to the highly technical nature of CamDrone$$s manufacturing process, CamDrone$$s direct labour rate has averaged $$30$ per hour for $2019.$ This rate already includes the employer$$s portion of employee benefits. A new collective agreement is being negotiated with a $3\%$ pay increase anticipated effective January $1,2020.$

$5.$ Each CamDrone requires $1\mathrm{.}25$ kg of direct materials. During $2019,$ the average cost of direct materials was $$57/$kg$.$ The supplier of the direct materials tends to be somewhat erratic, so CamDrone finds it necessary to maintain a direct materials inventory balance equal to $40\%$ of the following month$$s production needs as a precaution against stock$-$outs.

$6.$ Due to the similarity of the equipment in each of the production stages and the company$$s concentration on a single product, manufacturing overhead is allocated based on volume $($ for example, the units produced$).$ The variable manufacturing overhead rate for $2019$ is $$160/$unit$,$ consisting of:

Plant & Equipment Maintenance $ $70$

Utilities $40$

Indirect Materials $30$

Other $20$

$ $160$

$$

$7.$ The fixed manufacturing overhead costs for $2019$ are as follows:

Supervisor$$s salary $181,800$

Amortization of Plant & Equipment $ $132,000$

Insurance $84,000$

Training & Development $54,750$

Property and Business Taxes $48,000$

Other $30,000$

$ $530,550$

Amortization is calculated using the straight$-$line method, with no amortization calculated in the year capital assets are acquired.

$8.$ Aside from amortization, all other manufacturing costs are expected to increase by $3\%$ in $2020$ due to inflation.

$9.$ From previous experience, management has determined that an ending finished goods inventory equal to $25\%$ of the next month$$s sales is required to efficiently meet customer demands.

Collections Pattern

$10.$ Sales are on a cash and credit basis, with $49\%$ collected during the month of the sale, $33\%$ the following month, and $17\%$ the month thereafter. There are no early payment discounts for customers. Bad debt expenses $($amounts considered uncollectible$)$ account for $1\%$ of sales.

$11.$ Based on the collection pattern described above, accounts payable as at the end of business day on December $31,2019$ is projected to be $$1,098,899$ arising from the following estimates:

Sales $($November $2019)$ $$1,170,000$

Sales $($December $2019)$ $$1,800,000$

$$

Payments Pattern

$12.$ CamDrone pays for $20\%$ of a month$$s purchases of direct materials in the month of purchase, $50\%$ in the following month and the remaining $30\%$ two months after the month of purchase. There are no early payment discounts offered by suppliers.

$13.$ Based on the payment pattern described above, account