Bart and Lisa operate a manufacturing operation in southern New Brunswick. They make a single product. In order to help ensure a successful year they have engaged you to prepare a complete master budget for the upcoming quarter. Lisa is a qualified engineer but not overly sophisticated in financial matters. Bart handles the design and marketing of their companys products.

You have gathered the following information as of March 31, 2020:

B&L Manufacturing

Balance Sheet

March 31, 2020

Cash $ 60,000

Accounts Receivable 624,000

Inventory 302,587

Net Capital Assets 1,180,000

Total Assets 2,166,587

Accounts Payable 72,000

Common Stock 200,000

Shareholders Equity (SE) 1,894,587

Total Liabilities and SE 2,166,587

Inventory is made up of the following balances:

Raw Materials $ 28,800 6,400 units

WIP $100,000

Finished Goods $173,787 4,800 units

Recent and Projected Sales

$ Units

February $360,000 6,000

March 480,000 8,000

April 480,000 8,000

May 480,000 8,000

June 360,000 6,000

July 420,000 7,000

August 600,000 10,000

September 600,000 10,000

Credit accounts are collected 60% in the month following the sale and 40% in the next month following. There are no bad debts. Collections are current; the March A/R balance is made up of uncollected amounts from February and March sales. You may assume no changes to the WIP balances.

Each unit produced requires $9.00 of raw materials (representing 2 units of material with a purchase cost of $4.50 per unit) and $20.00 of direct labour (2 hours of direct labour are required for each unit). There is a minimum of 5,000 labour hours per month regardless of how much time is worked. All labour is paid at $10 per hour (i.e. no overtime is paid.) Overhead is applied on the basis of direct labour hours. Variable overhead is estimated to be $1.50 per direct labour hour. The desired finished goods inventory is 60% of the next months sales. The desired raw materials inventory is 40% of the next months production requirements. All purchases are paid in the month following the purchase and all A/P is current.

Fixed manufacturing overhead is estimated at $30,000 per month including total depreciation per month for manufacturing assets of $5,000.

Salaries, wages and commissions average 10% of sales, all other administrative expenses excluding depreciation is 5% of sales. Fixed selling and administrative expenses for rent, property taxes, depreciation and other items are $50,000 per month. Depreciation is $3,000 per month.

There is a planned acquisition of a new machine in April for $150,000 which will be paid for in April.

A dividend of $100,000 will be paid in June.

Any borrowing the company makes are effective at the beginning of the month and all repayments are made at the end of the month. Ignore interest for the purposes of this assignment. The company does not want to begin a month with less than $30,000 in beginning cash. Income taxes can be ignored.

Required:

Prepare monthly budgeted income statements and cash flow projections for the quarter (April, May & June) along with all the supporting budgets and a Balance Sheet as of June 30, 2020). Each budget component should be prepared on a separate sheet. This must be prepared using Excel (DO NOT USE ANOTHER SPREADSHEET PROGRAM) and submitted electronically via email. PLEASE INCLUDE THE NAMES OF ALL GROUP MEMBERS ON THE FIRST SHEET OF YOUR EXCEL FILE. AS PER COURSE OUTLINE, THIS ASSIGNMENT MUST BE DONE IN TEAMS OF 2-3.

HINT: If everything is correct you should get the following numbers:

Cost per unit of Finished Goods: $36.21

Total Assets: $2,237,384

Net Income: $175,477