***************** BUDGET 5-8******************************

******************* I NEED BUDGETS 5-8, MANUFACTURING OVERHEAD, UNIT COST CARD, SELLING AND ADMINISTRATIVE EXPENSE, ETC. *************************************

BALBOA COMPANY BUDGET ASSUMPTIONS Budgeted sales of the company's only product are as follows: January 2,000 units February 4,200 units March 3,000 units April 2,900 units May 1,500 units per unit. . The selling price is $52.50 All sales are on account. The company collects 80% of these credit sales in the month of the sale; 15% are collected in the month following sale; and the remaining 5% are uncollectible. The accounts receivable balance on December 31 was $35,000. All of this balance was collectible. The company desires to have inventory on hand at the end of each month equal to 25% of the following month's budgeted unit sales. On December 31, 400 units were on hand. Five 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 1,300 pounds. The material costs $0.25 per pound. Sixty percent of a month's purchases are paid for in the month of purchase; the other 40% is paid for in the following month. No discounts are given for early payment. The accounts payable balance on December 31 was $10,000. Each unit produced requires 0.75 direct labor hours to produce. The direct labor rate is $10 per hour. Management fully adjusts the workforce to the workload each month. Labor is purely variable. Variable manufacturing overhead is $15 per direct labor hour. Fixed manufacturing overhead is $50,000 per month. This includes $15,000 in depreciation, which is a non-cash expense. Company uses absorption costing in its budgeted income statement and balance sheet. Manufacturing overhead is applied on the basis of direct labor hours. The company has no work in process inventories. Variable selling and administrative expenses are $0.30 per unit sold. . . Fixed selling and administrative expenses are $48,000 per month which includes $8,000 in depreciation expense. A line of credit is available at a local bank that allows the company to borrow up to $100,000. All borrowing occurs at the beginning of the month, and all repayments occur at the end of the month. o The interest rate is 1.5% per month. Company desires a cash balance of at least $50,000 at the end of each month. The cash balance at the beginning of January was $60,000. Cash dividends of $40,000 are to be paid to stockholders in March. Equipment purchases of $30,000 are scheduled for February. Income tax rate is 20%. REQUIRED Prepare the following budgets for the months of January, February and March as well as a total for the quarter ended March 31. 1. Sales budget (with a schedule of expected cash collections). 2. Production budget. 3. Direct materials budget (with a schedule of expected cash disbursements for materials). 4. Direct labor budget. 5. Manufacturing overhead budget including calculation of PDOR. Unit Cost Card. Summary of quantity and price assumptions and calculation of cos 6. per unit. 7. Selling and administrative expense budget. 8. Cash budget. 9. Budgeted income statement