Cash Budget Quarter 4 Year Beginning cash balance Cash sales and collections on account Total cash available Less disbursements: Payments for. Raw materials Direct labor Overhead Selling and admin expenses Income taxes Dividends Equipment Total disbursements Excess (Deficiency) of cash available over needs Financing Borrowings Repayments Interest B Total financing Ending cash balance 52,000 0.30* 45,000 45,000 45,000 45,000 180,000 Quaint Stem Company is a high-end glassware manufacturer that produces fine stemware of the highest quality. The company is completing its fourth year of operations and is preparing to build its master budget for the coming year (2020). The budget will detail each quarter's activity and the activity for the year in the total. The master budget will be based on the following information: a. Fourth-quarter sales for 2019 are 82,000 units and 68,000 for the first quarter of 2021. b. Unit sales by quarter (for 2020) are projected as follows: 64,000 First quarter Second quarter Third quarter Fourth quarter 70,000 76,000 86,000 The selling price is $82 per unit. Cash sales make up 20% of all sales. Quaint collects 80 percent of the credit sales within the quarter in which they are realized; the other 20 percent are collected in the following quarter. There are no bad debts. c. The beginning inventory of finished goods is 13,000 units. Required ending inventory is 25% of the next quarter's sales in units. d. Each stemware unit uses one and a half hours of direct labor and two units of direct materials. Laborers are paid 24.00 per hour, and one unit of direct materials costs $12. e. There are 10,400 units of direct materials in beginning inventory as of January 1, 2019. At the end of each quarter, Quaint plans to have 10 percent of the direct materials needed for next qurter's unit sales. The ending unit of direct materials on hand at the end of the year was 14,200. f Quaint buys direct materials on account. Half of the purchases are paid for in the quarter of acquisition, and the remaining half are paid for in the following quarter. Wages and salaries are paid on the 15th and 30th of each month. g Fixed overhead totals $576,400 for each of the first three quarters. Of this total, S175,000 represents depreciation. During the fourth quarter, the depreciation and total fixed overhead increases by S18.750. All fixed expenses other than depreciation are paid for in cash in the quarter incurred. The fixed overhead rate is computed by dividing the year's total fixed overhead by the year's expected actual units produced. h Variable overhead is budgeted at $4.50 per direct labor hour. All vanable overhead expenses are paid for in the quarter incurred. Fixed selling and administrative expenses total S230,000 per quarter, including S50,000 depreciation. Variable selling and administrative expenses are budgeted at S4 per unit sold. All selling and administrative expenses are paid for in the quarter incurred The balance sheet as of December 31.2018. s as follows: LIABILITIES and STOCKHOLDERS'EQUITY S1.ASSV S 680,000 Accounts Payable 52.000 Cash 1275O0 124.810 ACunts Roeevable Raw Materials Inventory Fslied Kioud Insentir 9.750.000 656 500 Capital Stock depreciation. During the fourth quarter, the depreciation and total fixed overhead increases by $18,750. All fixed expenses other than depreciation are paid for in cash in the quarter incurred. The fixed overhead rate is computed by dividing the year's total fixed overhead by the year's expected actual units produced. h. Variable overhead is budgeted at $4.50 per direct labor hour. All variable overhead expenses are paid for in the quarter incurred. i Fixed selling and administrative expenses total $230,000 per quarter, including $50,000 depreciation. j. Variable selling and administrative expenses are budgeted at $4 per unit sold. All selling and administrative expenses are paid for in the quarter incurred. k. The balance sheet as of December 31, 2018, is as follows: LIABILITIES and STOCKHOLDERS'EQUITY ASSETS $ 680,000 52,000 Accounts Payable Cash Accounts Receivable Raw Materials Inventory Finished Goods Inventory Plant and equipment, net Total Assets 1,275,000 124,800 9,750,000 656,500 Capital Stock 9,360.000 Retained Earnings 1,038.300 $11.468.300 Total Liab. & Equity SI1.468.300 1. Quaint has a required cash balance of $50,000. An operating line of credit is available up to $250,000 at 10% interest. All borrowings and payments must be made in increments of $10,000 and interest is paid when principal is paid. All borrowings take place at the beginning of the quarter and all payments take place at the end of the quarter. m. Quaint will pay quarterly dividends of $45,000. At the end of the third quarter, $575,000 of equipment will be purchased and at the end of the fourth quarter, $175,000 of equipment will be purchased. n. The income tax rate is 30%