cakes cakes cakes cakes cakes cakes cakes cakes Erin Mckenna's Bakery relies on budgeting to aid in the management of its cupcake operations. Assume that Erin McKenna's Bakery prepares monthly cash budgets. Relevant data from assumed operating budgets for 2021 are as follows: January February March Sales $410,000 $450.000 $430,000 Direct materials purchases $185,000 $195,000 $195,000 Direct labor $70,000 $85,000 $80,000 Manufacturing overhead $49,500 $65,000 $60,000 Selling & Administrative Expenses $85.000 $99,000 $90,000 Assume that all sales shown are credit sales. Collections are expected to be 75% in the month of sale, and 25% in the month following sale. Erin Mckenna's Bakery pays 60% of direct materials purchases in cash in the month of purchase, and the balance due in the inonth following purchase. All other items above are paid in the month incurred. (depreciation has been excluded from the expenses listed above. Total depreciation expense is $20,000 per month for assets used in selling and administrative activities). Other data: 1. Sales: December 2020, $320,000 2. Purchases of direct materials: December 2020. $175,000. 3. In January the company purchased equipment costing $10,000 The company's cash balance on January 1, 2021 is expected to be $80,000. The company wants to maintain a minimum cash balance of $75,000 at the end of each month. If the budget shows a shortfall at the end of the month, they can borrow money from a line of credit. They would borrow any needed funds at the 1st day of the month so they are sure not to run out of cash. They pay the funds back as they can, but assume they pay it back on the last day of the month. The bank charges 8% interest. Interest is paid when the loan is paid off. Question #1A: What are expected cash collections from customers for January, February & March? Question 1B: What is the budgeted February month end balance for Accounts Receivable Question #2A: What are expected payments for direct materials for January, February and March? Question 2B: What is the February month end balance for Accounts Payable? Question #3: Prepare a cash payments budget for January, February and March. Include payments for direct materials that you calculated in Question #2. Don't forget the purchase of equipment