Budgeted units to be sold for each quarter: 1000, 1200, 1500 and 2000 for the year 2018 and 2019. Assume that company policy requires 20% of the next quarters sales in ending inventory and that beginning inventory of t-shirts for the first quarter of the year was 180. The unit selling price of t-shirt is $10.

Budgeted units to be produced for each quarter: 1060, 1260, 1600, and 1800. Plain t- shirts cost $3 each, and ink costs $0.20 per ounce. On a per-unit basis, the factory needs one plane t-shirt and five ounces of ink for each logoed t-shirt that the company produces. Lion Inc. is to have 10% of the following quarters production needs in ending inventory. The factory has 58 plain t-shirts and 390 ounces of ink on hand on January 1. At the end of the year, the desired ending inventory is 106 plain t- shirts and 530 ounces of ink.

Budgeted units to be produced for each quarter are: 1060, 1260, 1600, and 1800. It takes 0.12 hour to produce one t-shirt. The average wage cost per hour is $10.

Refer to the direct labor budget. The predetermined overhead rate for variable overhead is $ 5 per direct labor hour. Fixed overhead is budgeted at $1,645 per quarter (this amount include $540 per quarter for depreciation among others). There is no noncash expense items other than depreciation expense.

For SG&A expenses: Variable SG&A costs are $0.10 per unit sold. As for fixed SG&A costs, salaries average $1420 per quarter; utilities, $50 per quarter; and depreciation, $150 per quarter. Advertising for quarters 1 through 4 is $100, 200, 800 and 500, respectively. There is no noncash expense items other than depreciation expense. Prepare SG&A Expense Budget.

Lion Inc. has provided the following information for preparing a cash budget:

Expected cash balance on 1/1/2018 = $40,000

Information on cash receipts: (1) From past experience, Lion Inc. expects that, on average, 25% of total sales are cash and 75% of total sales are on credit. Of the credit sales, the company expects that 90% will be paid in cash during the quarter of sale, and the remaining 10% will be paid in the following quarter. Budgeted units to be sold for each quarter: 1000, 1200, 1500 and 2000. The balance in A/R as of the last quarter of 2017 was $1350. This will be collected in cash during the first quarter of 2018.

a. Calculate cash sales expected in each quarter

b. Prepare a schedule showing cash receipts from sales expected in each quarter of 2018.

(2) In the 1st quarter of 2018, Lion Inc. expects to sell marketable securities that are valued at $5,000.

Information on cash disbursements: (3) Direct materials are all purchased on credit. Lion Inc. usually pays 80% of its purchases in the same quarter as the purchase and the rest is paid in the following quarter. The company expects to have an accounts payable balance of $1,000 on December 31, 2017; and all outstanding payables are expected to be paid in the first quarter of 2018. Prepare cash disbursement on A/P budget. (4) All employees direct laborers, supervisors, S&A staff are all paid in the quarter in which their services are used. (5) Overhead costs and S&A expenses are paid in the quarter in which they are incurred. (6) On April 1, 2018, the company plans to spend $30,000 to buy a high-end knitting machine, which has a 10-year useful life.

Information on financing: (7) The company plans to borrow $30,000 from the local bank at an annual interest rate of 12%

to fund the purchase of the high-end kitting machine at the beginning of the second quarter. Principal will be due in 1 year and interest will be due every quarter. The company does not expect to issue stock or pay any dividends in 2018. Also, as of 12/31/2018, the company does not have any debt on its balance sheet. The company wants to maintain a minimum cash balance of $15,000.

7. Budgeted Income Statement: The Company calculates the predetermined overhead rate every year using direct labor hours as a cost driver (Round to the nearest cent). Also, when calculating the unit product cost, make sure to include two direct material components (t-shirt and ink). Put together your master budget for 2018 in the following order:

1. Sales Budget 2. Schedule of Cash Collection 3. Production Budget 3. Direct materials purchase Budget

- one for T-shirt

- one for Ink 4. Schedule of Cash Disbursement

5. Direct Labor Budget 6. Manufacturing Overhead Budget

7. SG&A Budget 8. Cash Budget 9. Budgeted Income Statement.