Bus 213 Managerial Accounting Special Project #1 Due Date: Monday, November 20, 2017 Name The owner of Northwind Unlimited, Inc. has been concerned about the shortage of cash the company experiences duuing various times of the year. As a recent graduate of a highly regarded business school, you have been charged with the task of developing a budget that will allow the company to get a better understanding of its cash needs during the year. You have decided to prepare a master budget for the upcoming second quarter. The accounting department and other areas of the company have provided you with the following infomation. The company sells many styles of pens, but all are sold for the same price-$10 cach. Actual sales of pens for the last three months and budgeted sales for the next six months follow: January (actual) February (a March (actual) April (budget) May (budget) 20,000 26,000 40,000 65,000 100,000 June (budget) July (budget) August (budget) September (budget) 50,000 30,000 28,000 25,000 The company experiences peak sales during May. The production manager prefers that inventory should be on hand at the end of each month to supply 40% of the pens sold in the following month. Suppliers are paid $4 for each pen. One-half of a month's purchases is paid for in the month of purchase, the other half is paid for in the following month. All sales are on credit. Only 20% of a month's sales are collected in the month of sale. An additional 70% is collected in the following month, and the remaining 10% is collected in the second month following sale. Bad debts have been negligible Monthly operating expenses for the company are given below: Variable Sales commissions 4% of sales lxe Advertising Rent Salaries Utilities Insurance Depreciation $200,000 $18,000 $106,000 $7,000 $ 3,000 14,000 Insurance is paid on an amual basis, in November of each year