Balance sheet first quarter at 31-3-21
Assets			Liabilities
Assets	638000		equity	365000
Minus Depreciated assets	-169000		Not distributed profits	411100
		469000	Long term loan	530000
Inventory -raw mat	93000		Suppliers	215400
Inventory finished goods	433000		Short term obligations	31000
Total inventory	526000
Clients	487000
Cash	70000
Total		1552500	Total	1552500

The management of the company asked the accounting department to prepare a general one

budget (master budget) as well as the foreseen financial situations for the 2^nd quarter of 20X1. For this reason the accounting department collected them following information:

a) The stock of Raw Materials of 31-3-20X1 includes 4,650 kilos of materials for 20 / kilo. The

corresponding stock of finished products includes 20,000 units of product at cost 21.65 / unit

b) March sales amounted to 25,000 units. The projected sales for the next four months is 25,000 units in April, 23,000 units in May, 22,400 units in June and 25,000 units in July. Its selling priceof product is 26 / unit.

c) The company's policy is to maintain stocks of finished products equal every month with 80% of next months projected sales, and raw material stocks equal with 50% of the necessary Raw Materials to cover next month's production. TheThe cost of Raw Materials for the next quarter is expected to remain stable at 20 / kg.The final stock of Raw Materials on 30-6-20X1 is expected to be 5,900 kg.

d) For the production of a product unit 0.50 kg of Raw Materials are required at cost 20 / kg and 0.50 hours of direct work at a cost of 15 / hour. Overheads are charged with rate 60% on the cost of direct labor. This amount is included depreciation amounting to 6,000 per month and relating entirely to

production process.

e) The sellers' commissions are 5% of the sales and are paid monthly for sale. Other sales expenses are expected to be 4,500 for April and from 5,000 for May and June.

f) Administrative expenses amount to 35,000 per month.

g) The company for its long-term loan pays every month only interest at interest rate

0.8% per month. The loan capital will be repaid at maturity which is in two

years from today.

h) The company receives 25% of its sales in the month of sale, and the rest

75% is collected in full next month.

i) Purchases of Raw Materials are paid in full the following month of purchase.

j) A dividend of 30,000 will be paid in June.

k) In June, a new machine will be purchased at a cost of 150,000. The purchase will be made

cash.

l) Income taxes amount to 25% and are paid the following year with

submission of the tax return.

Required:

4. The budget of production costs and cost of goods sold