Brass Instruments Inc. Brass Instruments Inc is a worldwide musical part manufacturing firm based in North America. After many years in the market, the Peterborough division, which produces one product called "Brass Instruments Stand," reaches a spike on the sales level. The Management wants to have a significant investment to expand the facility and increase production, but it is requesting from the division to prepare a budget for the third quarter of 2021. The actual sales from 2021 are May 92,000 units June 104,000 units The division manager projected the following sales: July 2021 110,000 units August 2021 225,000 units September 2021 122,000 units October 2021 137,000 units November 2021 162,000 units The selling price is $13 per unit 1. From previous experience, management has determined that finished goods ending inventory equal to 20% of the next month's unit sales are required to fit the buyer's demands. 2. The Brass Instruments Stand requires one types of raw materials: Plastic Each Brass Instruments Stand requires 1.4 kilograms of plastic, at the cost of $1.5 per kilogram. The supplier of Plastic tends to be somewhat erratic, so Brass Instruments Inc finds it necessary to maintain an inventory balance equal to 20% of the material needed for the next month as a precaution against stock-outs. The direct material on June 30 is 37,240 Kg. 3. The beginning accounts payable will consist $116,298. 4. Brass Instruments Inc pays for 50% of a month's purchases in the month of purchase and 50% in the following month. 5. The manufacturing overhead is based on direct labour hours. The workers receive an average of $16.00 per hour, including employee benefits. Each Brass Instruments Stand takes 18 minutes to complete. 6. Brass Instruments Inc allocate the manufacturing overhead based on direct labour hours; The variable manufacturing overhead is as follow: Maintenance $0.40; Utilities $0.60; Indirect Labor $0.60; Indirect materials $0.40 7. The Monthly Fixed manufacturing overhead costs are as follows: Janitorial Insurance Depreciation Property Taxes Salaries $2,200 $1,450 $14,200 $2,000 $44,000 8. Brass Instruments Inc allocate the selling and administration expenses based on units sales, The variable selling and administration rate is $1.5 per unit sales. 9. The Monthly Selling and administrative expenses are Salaries $62,000 Other fixed cost $3,600 Insurance $1,100 Depreciation $2,800 Advertising $12,000 10. Sales are on account (credit); 50% of the sales are collected during the month of sales and 50% the following month. This was the same collection pattern as in previous years. 11. The company wants to maintain at the end of each month a minimum bank balance of $500,000. In case the company has a deficiency of money or is not able to reach this minimum bank balance, the company 3 can borrow from a line of credit at the rate of 3% per annum. All borrowing is considered to happen on the first day of the month, and repayments are on the last day of the month. All borrowings and repayments from the bank should be in multiples of $1,000. It pays interest monthly. The cash balance on June 30 is $184,000. 12. In August, $680,000 of new equipment to update operations will be purchased with cash. Please ignore the depreciation of this new asset. 13. Three months' insurance is prepaid on the first day of the first month of the quarter. 14. The company has a Common Stock beginning balance of 20000000 $1,075,676 Required: Prepare the budget for 2021, the third quarter, for Brass Instruments Inc for the including the following schedules: Prepare the following Schedules (in the same order) a) Prepare the Sales Budget for the third quarter (textbook illustration 10.3) b) Prepare the Schedule of Expected Collection from Customers for the third quarter (Illustration 10.17) c) Prepare the Production Budget for the third quarter (Illustration 10.5) d) Prepare the Direct Materials Budget for the third quarter (Illustration 10.9) e) Prepare the Expected Direct Material Cash Disbursements for the third quarter (Illustration 10.18) f) Prepare the Direct Labour Budget for the third quarter (Illustration 10.11) g) Prepare the Manufacturing Overhead Budget for the third quarter (Illustration 10.12) h) Prepare the Unit cost (Illustration 10.14) i) Prepare the Selling and Administrative Expenses Budget for the third quarter (Illustration 10.13) j) Prepare the Cash Budget for the third quarter (Illustration 10.19) k) Prepare the income statement (illustration 10.15) Brass Instruments Inc. Brass Instruments Inc is a worldwide musical part manufacturing firm based in North America. After many years in the market, the Peterborough division, which produces one product called "Brass Instruments Stand," reaches a spike on the sales level. The Management wants to have a significant investment to expand the facility and increase production, but it is requesting from the division to prepare a budget for the third quarter of 2021. The actual sales from 2021 are May 92,000 units June 104,000 units The division manager projected the following sales: July 2021 110,000 units August 2021 225,000 units September 2021 122,000 units October 2021 137,000 units November 2021 162,000 units The selling price is $13 per unit 1. From previous experience, management has determined that finished goods ending inventory equal to 20% of the next month's unit sales are required to fit the buyer's demands. 2. The Brass Instruments Stand requires one types of raw materials: Plastic Each Brass Instruments Stand requires 1.4 kilograms of plastic, at the cost of $1.5 per kilogram. The supplier of Plastic tends to be somewhat erratic, so Brass Instruments Inc finds it necessary to maintain an inventory balance equal to 20% of the material needed for the next month as a precaution against stock-outs. The direct material on June 30 is 37,240 Kg. 3. The beginning accounts payable will consist $116,298. 4. Brass Instruments Inc pays for 50% of a month's purchases in the month of purchase and 50% in the following month. 5. The manufacturing overhead is based on direct labour hours. The workers receive an average of $16.00 per hour, including employee benefits. Each Brass Instruments Stand takes 18 minutes to complete. 6. Brass Instruments Inc allocate the manufacturing overhead based on direct labour hours; The variable manufacturing overhead is as follow: Maintenance $0.40; Utilities $0.60; Indirect Labor $0.60; Indirect materials $0.40 7. The Monthly Fixed manufacturing overhead costs are as follows: Janitorial Insurance Depreciation Property Taxes Salaries $2,200 $1,450 $14,200 $2,000 $44,000 8. Brass Instruments Inc allocate the selling and administration expenses based on units sales, The variable selling and administration rate is $1.5 per unit sales. 9. The Monthly Selling and administrative expenses are Salaries $62,000 Other fixed cost $3,600 Insurance $1,100 Depreciation $2,800 Advertising $12,000 10. Sales are on account (credit); 50% of the sales are collected during the month of sales and 50% the following month. This was the same collection pattern as in previous years. 11. The company wants to maintain at the end of each month a minimum bank balance of $500,000. In case the company has a deficiency of money or is not able to reach this minimum bank balance, the company 3 can borrow from a line of credit at the rate of 3% per annum. All borrowing is considered to happen on the first day of the month, and repayments are on the last day of the month. All borrowings and repayments from the bank should be in multiples of $1,000. It pays interest monthly. The cash balance on June 30 is $184,000. 12. In August, $680,000 of new equipment to update operations will be purchased with cash. Please ignore the depreciation of this new asset. 13. Three months' insurance is prepaid on the first day of the first month of the quarter. 14. The company has a Common Stock beginning balance of 20000000 $1,075,676 Required: Prepare the budget for 2021, the third quarter, for Brass Instruments Inc for the including the following schedules: Prepare the following Schedules (in the same order) a) Prepare the Sales Budget for the third quarter (textbook illustration 10.3) b) Prepare the Schedule of Expected Collection from Customers for the third quarter (Illustration 10.17) c) Prepare the Production Budget for the third quarter (Illustration 10.5) d) Prepare the Direct Materials Budget for the third quarter (Illustration 10.9) e) Prepare the Expected Direct Material Cash Disbursements for the third quarter (Illustration 10.18) f) Prepare the Direct Labour Budget for the third quarter (Illustration 10.11) g) Prepare the Manufacturing Overhead Budget for the third quarter (Illustration 10.12) h) Prepare the Unit cost (Illustration 10.14) i) Prepare the Selling and Administrative Expenses Budget for the third quarter (Illustration 10.13) j) Prepare the Cash Budget for the third quarter (Illustration 10.19) k) Prepare the income statement (illustration 10.15)