Banks DIH Limited, wants a master budget prepared for the first quarter of 2023

The managers of the different departments have provided the following information: The Sales Manager has projected the following sales:

January 5,000 units

February 4,000 units

March 6,000 units

Projected selling price is $35.00/unit

Your Production Manager gave the following information:

Ending Inventory is to be 20% of next months production need to the nearest dollar

Aprils Projected Sales 5,000 units

Decembers 2022 Ending Inventory was 1,000 units

The Manufacturing Manager has estimated the following:

Each unit will require 4 grams of material

Material in Ending Inventory is 20% of next months needs

Decembers Ending Material Inventory was 4,800 g

Projected cost of material: $2.50/gram

The Personnel Manager has estimated that Direct Labour will be projected at:

0.75 hours of Direct Labour per unit

Direct Labour Cost: $8.50/hour

The Facilities Manager has estimated that the Manufacturing Overhead will be projected at:

Variable Overhead Rate to be $8 per Direct Labour hours

Fixed Overhead Rate to be $3,000 per month

The Accounting Department Manager has provided the following information:

Selling and Administrative Expenses are projected to be a monthly cost of:

Salaries $6,000

Rent $1,500

Advertising $1,100

Telephone $300

Other $500

Cash Receivable:

Decembers Sales were $10,000

80% of sales is collected in the quarter in which they were made

20% of sales collected in the following quarter in which they were made

Bad Debts is negligible

Accounts Payable:

80% of Payables is paid for in the current month

20% of Payables is paid for in the following month

Decembers Payables were $75,000

Federal Income Tax is estimated at 22% average.

Banks DIH Limited

has a $20,000 cash balance for the beginning of January

pays Dividends of $8,000 to be paid in March

pays projected Federal Income tax in March

From the beginning Balance Sheet:

Land = $150,000

Building = $45,000

Depreciation (Building) = $11,250

Retained Earnings = $58,780

Capital Stock = $225,000

For the Master Budget, you are expected to prepare the following:

Selling & Administrative Expenses Budget

Production Budget

Direct Materials Budget plus a Schedule of Expected Cash Disbursements