Barker Company produces and sells a single product with budgeted or standard costs as follows:

Inputs

Standards

Direct materials

10 lbs at $10.00 per pound

Direct labor

8 hours at $12.50 per hour

Variable factory overhead

8 hours at $20.00 per hour

Fixed factory overhead

8 hours at $40.00 per hour

Overhead rates are based on 8,000 standard direct labor hours per month, i.e., this is the master budget denominator activity level.

Desired ending inventories of materials are based on 10% of the next months materials needed. Desired ending finished goods are based on 5% of next periods budgeted unit sales.

Unit Sales are budgeted as follows:

January

February

March

April

1,000

1,200

1,600

1,400

The budgeted sales price is $1000 per unit. Sales are budgeted as 80% credit sales and 20% cash sales. Past experience indicates that 60% of credit sales are collected during the month of sale and 40% are collected in the following month. Selling and administrative expenses are: Variable = 20% of sales dollars, Fixed = $250,000 per month.

The budget assumption concerning cash payment proportions is that all current purchases of direct material, direct labor, factory overhead and selling and administrative items will be paid for during the current period. The beginning cash balance for February is $10,000. Depreciation and other non-cash fixed costs are: manufacturing = $100,000, selling and administrative = $75,000.

Required:

A Partial Master Budget for February as follows.

1. Sales budget for February, including net sales dollars.

2. Production Budget, i.e., units to be produced for February.

3. Direct Material quantity needed (units and dollars) for production for February.

4. Direct Material quantity to be purchased (units and dollars) for February.

5. Direct labor needed for production for February.

6. Budgeted cost of direct labor used for February.

7. Budgeted factory overhead costs for February.

8. Budgeted Cost of goods sold for February.

9. Selling and Administrative Costs Budget for February

10. Budgeted Income Statement for February

11. Prepare a cash budget for February (including the cash receipts and cash disbursements supporting schedules).