BONUS ASSIGNMENT Royal Company is preparing budgets for the 2nd quarter, which ends on June 30. . Budgeted sales of the company's only product for the next five months are: April May. June. July. 20,000 units: 50,000 units 30,000 units 25,000 units 15,000 units August.... The selling price is $10 per unit. Additional data: All sales are on account. The company collects 70% of these credit sales in the month of the sale; 25% are collected in the month following sale; and the remaining 5% are uncollectible. The accounts receivable balance on March 31 was $30,000. All of this balance was collectible. The company desires to have inventory on hand at the end of each month equal to 20% of the following month's budgeted unit sales. On March 31, 4,000 units were on hand. 5 pounds of material are required per unit of product. Management desires to have materials on hand at the end of each month equal . to 10% of the following month's production needs. The beginning materials inventory was 13,000 pounds. The material costs $0.40 per pound Half of a month's purchases are paid for in the month of purchase; the other half is paid for in the following month. No discounts are given for early payment. . The accounts payable balance on March 31 was $12,000. Each unit produced requires 0.05 hour of direct labor time. . Each hour of direct labor time costs the company $10. . Management fully adjusts the workforce to the workload each month. Royal Company uses absorption costing in its budgeted income statement and balance sheet. Total assets. Liabilities: Accounts payable...... Stockholders' equity: Common stock Retained earnings. Total liabilities and stockholders' equity....... REQUIRED $1,355,200 $ 12,000 $ 200,000 1,143,200 1,343,200 $1,355,200 Prepare the following elements of the Master Budget: 1. Sales budget (with a schedule of expected cash collections). 2. 3. Production budget. Direct materials budget (with a schedule of expected cash disbursements for materials). 4. Direct labor budget. 5. Manufacturing overhead budget. 6. Ending finished goods inventory budget. 7. Selling and administrative expense budget. 8. Cash budget. Total assets. Liabilities: Accounts payable..... Stockholders' equity: Common stock Retained earnings. Total liabilities and stockholders' equity.... REQUIRED $ 200,000 1,143,200 Prepare the following elements of the Master Budget: 1. Sales budget (with a schedule of expected cash collections). 2. 3. 4. 5. 6. Production budget. $1,355,200 $ 12,000 1,343,200 $1,355,200 Direct materials budget (with a schedule of expected cash disbursements for materials). Direct labor budget. Manufacturing overhead budget. Ending finished goods inventory budget. 7. Selling and administrative expense budget. 8. Cash budget.