CHILD'S PLAY COMPANY (C) This case uses the data provided in Child's Play Company (A) and (B). Assume that the company decided to follow Plan A for 2017. The CFO, Don Capp was assembling data in November 2016 to prepare a budget for 2017. The sales department had indicated that the expected pattern of sales was as follows: 20 percent of the sales in the first quarter, 30 percent in each of the next two quarters, and 20 percent in the last quarter. It was hard to figure out the sales by month -- the best assumption was that sales would be spread out evenly by month within each quarter. The promotional materials would be supplied to retailers in January. The production department planned to maintain as the finished goods inventory enough inventory for the following month's sales. However, the December 2016 finished goods inventory was expected to be only 20,000 rattles, and the December 2017 finished goods inventory was planned to be equal to December 2017's sales (since January 2018 expected sales was not yet known). Don Capp also knew that several of the company's policies would continue into the next year: a. Child's Play generally sells to retailers on two month's credit. The beginning balance in accounts receivable at the start of the year was expected to be $400,000, of which half would be collected in January 2017, and the remainder in February. b. Raw materials and packaging materials are purchased one month ahead of their use. The company makes the purchase on one month's credit. c. All costs (other than materials) are paid for as incurred. d. The fixed manufacturing costs include $80,000 of depreciation expense. Fixed selling and administrative costs include $40,000 of depreciation. The rest of the costs relate to rental costs, property taxes and salaries and are paid monthly. e. The company generally maintains a cash balance of about $10,000. If the balance drops below that amount, the company will take a short term loan from the bank. (Ignore interest.) Required: 1. Prepare a production budget. 2. Prepare a cash budget for each month for the first quarter of 2017. Ignore income taxes.