Budgeted Sales:
Budgeted Sales Units - Standard	68,000	72,000	65,000
Budgeted Sales Units - Deluxe	35,000	36,000	33,600
Budgeted Selling Price per Unit of Standard	$50.00	$50.00	$50.00
Budgeted Selling Price per Unit of Deluxe	$70.00	$70.00	$70.00
Budgeted Production Units:	January	February	March
Standard	82,400	85,000	66,000
Deluxe	42,200	42,720	38,500
Budgeted RM Purchases:	January	February	March
Budgeted Purchase of Material A (in pounds)	431,200	464,160	379,500
Budgeted Purchase of Material B (in pounds)	352,800	381,600	324,500
Budgeted Cost per Pound of Material A	$2.50	$2.50	$2.50
Budgeted Cost per Pound of Material B	$4.00	$4.00	$4.00
Budgeted Collection Plan for Sales:
% of Sales Collected in the month of sale	80%	80%	80%
% of Sales Collected in the following month	20%	20%	20%
Budgeted Payment Plan for Purchases:
% of purchases paid in the month of purchase	70%	70%	70%
% of Purchases paid in the following month	30%	30%	30%
Production Needs:
Direct Materials	January	February	March
Pounds of Material A Required per Unit of Standard	4	4	4
Pounds of Material B Required per Unit of Standard	2	2	2
Pounds of Material A Required per Unit of Deluxe	3	3	3
Pounds of Material B Required per Unit of Deluxe	5	5	5
Direct Labor	January	February	March
DL hours required for each unit of Standard	0.50	0.50	0.50
DL hours required for each unit of Deluxe	0.80	0.80	0.80
Direct Labor rate per hour	$15	$15	$15
Factory Overhead
Variable Factory overhead cost - as a % of direct labor cost	120%	120%	120%
Fixed Factory overhead cost per month including depreciation expense	$144,000	$156,000	$156,000
Depreciation expense portion of factory overhead costs	$15,000	$20,000	$20,000
Other Expenditures:	January	February	March
Shipping Expense per unit of each product	$1.60	$1.60	$1.60
Advertising Expenses	$60,000	$60,000	$60,000
Sales Commission - % of sales	4.20%	4.20%	4.20%
Administrative Salaries	$188,000	$188,000	$188,000
Utilities Expense	$20,000	$21,000	$21,000
Income Tax Expense	$210,000	$240,000	$200,000
Other Data:	January	February	March
Applicable interest rate per month	2%	2%	2%
Budgeted Machinery Purchases for Factory	$3,000,000
Payment of Dividends			$60,000
Minimum required cash balance	$25,000	$25,000	$25,000
Account Balances as of Jan. 1st:
Accounts receivable	$1,350,000
Accounts payable	$895,000
Cash	$30,000
Financing:
The numbers in cell highlighted in yellow must be determined & entered:
Borrowing
Interest Expense
Repayment of the principal of the borrowed money

1. A portion of each months sales is collected in the month of sale, and the rest is collected in the following month.
2. Production requires two types of materials for each product Material A and Material B.
3. A portion of each months purchase of raw materials is paid in the month of purchase, and the rest is paid in the following month.
4. All remaining manufacturing expenses (direct labor and factory overhead), and selling and administrative expenses are paid in cash during the month incurred.
5. Company uses Variable Costing when preparing Income Statement (that is, entire fixed factory overhead cost is expensed during the month incurred).
6. As reflected on the Excel sheet, specific cash dividends and capital expenditures are planned.
7. Minimum required cash balance at the end of each month is $25,000.
8. If necessary, the company will borrow cash from a bank. The borrowing will be in multiples of
9. The company's policy and plan for the first three months of upcoming year is summarized on Excel file in the tab entitled Budgeting.

Hope Company manufactures and sells two types of control devices Standard and Deluxe.

$1,000 and will bear interest at 2% per month. All borrowing will take place at the beginning of the month. A months interest will be paid in cash at the end of month. Any cash available will be used to pay off the outstanding debt in multiples of $1,000 at the end of each month. The amount of borrowing, interest, and payoff must be computed manually and entered in the data section in the space provided and highlighted in yellow.

The accountant of company, after preparing sales budget, production budget, and RM purchases budget, has taken a vacation to go to Hawaii. You have been hired to prepare a Budgeted Income Statement and a Cash Budget for the company. These budgets are critically needed for planning and decision making.