Chapter 22 Budgetary Planning Comprehensive Assignment NOTE: Your solution should be submitted in Canvas. An Excel template for this problem is provided in Canvas. You may prepare your solution using Excel, Word, or a hand- written paper document that can be scanned and submitted as a .pdf document. Maximum points will be awarded for solutions that are legible and clearly labeled. Less points will be awarded for solutions that are confusing and hard to read. Please include your name and student ID on your solution. Company Information: Chattanooga Corporation is preparing its budget for the coming year, 2020. The first step is to plan for the first quarter of that coming year. The company has gathered information from its managers in preparation of the budgeting process. Sales Unit sales for November 2019 112.500 Unit sales for December 2019 102,100 Expected unit sales for January 2020 113,000 Expected unit sales for February 2020 112,500 Expected unit sales for March 2020 116,000 Expected unit sales for April 2020 125,000 Expected unit sales for May 2020 Unit selling price 137,500 $12 The Company likes to keep 10% of the next month's unit sales in ending inventory. All sales are on account. 85% of the Accounts Receivable are collected in the month of sale, and 15% of the Accounts Receivable are collected in the month after sale. Accounts receivable on December 31, 2019, totaled $183,780. Direct Materials Direct materials cost 75 cents per pound. Two pounds of direct materials are required to produce each unit. Chattanooga Corporation likes to keep 5% of the materials needed for the next month in its ending inventory. Raw Materials on December 31, 2019, totaled 11,295 pounds. Payment for materials is made within 15 days. 50% is paid in the month of purchase, and 50% is paid in the month after purchase. Accounts Payable on December 31, 2019, totaled $120,595. Direct Labor Labor requires 12 minutes per unit for completion and is paid at a rate of $8 per hour. Indirect materials Indirect labor Manufacturing Overhead 30 per labor hour 50 per labor hour Utilities 45 per labor hour Maintenance 25 per labor hour Salaries $42,000 per month Depreciation $16,800 per month Property taxes $ 2,675 per month Insurance $ 1,200 per month Janitorial $1,300 per month Selling and Administrative Variable selling and administrative cost per unit is $1.60. Advertising $15,000 a month Insurance $ 1,400 a month Salaries $72,000 a month Depreciation $ 2,500 a month $ 3,000 a month Other fixed costs Other Information The Cash balance on December 31, 2019, totaled $100,500, but management has decided it would like to maintain a cash balance of at least $800,000 beginning on January 31, 2020. Dividends are paid each month at the rate of $2.50 per share for 5,000 shares outstanding. The company has an open line of credit with Romney's Bank. The terms of the agreement requires borrowing to be in $1,000 increments at 8% interest. The Company borrows on the first day of the month and repays on the last day of the month. A $500,000 equipment purchase is planned for February. Instructions For the first quarter of 2020, do the following. (a) (b) Prepare a sales budget. Prepare a production budget. (c) Prepare a direct materials budget. (Round to nearest dollar) (d) Prepare a direct labor budget. (For calculations, round to the nearest hour.) (e) Prepare a manufacturing overhead budget. (Round amounts to the nearest dollar.) (f) Prepare a selling and administrative budget. March Quarter Chatonga Corporation For the Q 2009 Fubmary Quanter Chetomonga Corpor For the For Owner of 2006 For The Five Charter S March Quarter March Quarker Chattamanga Corporatio Dalget For the Form Quater of 2030 Dt Labor B ||For the Find Quarter of 2036 The Fier of 200 Tabay March Owner March Qwerker 22.1 Effective Budgeting and the Master Budget 22.2 Sales, Production, and Direct Materials Budgets 22.3 Direct Labor, Manufacturing Overhead, and S&A Expense Budgets 22.4 Cash Budget and Budgeted Balance Sheet 22.5 Budgeting in Nonmanufacturing Companies