1. Clean Hands manufactures and sells hand sanitizer to retail stores. The following estimates were made for 2020. Selling price is $4.5 per 900 ml bottle.

Expected demand (units)

March 124,000

April 130,000

May 135,000

June 120,000

July 125,000

August 115,000

September 116,000

Inventory on March 1 is 30,000 bottles. Planned ending inventory for each month is 30 percent of the sales for next month.

Materials and Labour requirement for 900 ml bottle:

99% Isopropyl alcohol 600 ml

Aloe vera gel 300 ml

Inventory of 99% Isopropyl alcohol and Aloe vera gel on March 1 is 20,000 liters of 99% isopropyl and 10,000 litres of aloe vera gel. Planned ending inventory for each month for each ingredient is 35 percent of production needs for the subsequent month.

Direct manufacturing labour 25 seconds per bottle. Wage rate is $18 per hour.

Collection of sales is 30% in the month of sale 50% in the subsequent month and 20% two months after sale. Retailers who pay in the month of sale receive a 5% discount. Budgeted sales for January and February are 80,000 and 100,000 units respectively.

Payment of purchases are 30% in the month of purchase 60% in the subsequent month and 10% two months after purchase. A 10 percent discount is provided by suppliers for purchases paid in the month of purchase.

Budgeted purchases for January (20,000 litres of 99% isopropyl and 35,000 liters of aloe vera gel) and February (25,000 litres of 99% isopropyl alcohol and 28,000 liters of aloe vera gel). 99% Isopropyl cost $2.5 per liter, and Aloe vera gel cost $3.5 per liter.

The cost to produce each bottle for January is $2.85.

Other payments:

Manufacturing overhead of $25,000 per month is allocated based on the number of units produced.

$ 2,750 loan payment per month

Employee benefits of 38% of gross wages.

Prepare:

1. Revenue budget for March to July. Include total column
2. Budgeted production for March to July. Include total column
3. Budgeted purchases (Quantity and dollars) for March to July for 99% Isopropyl and Aloe vera gel. Include total column for each ingredient.
4. Budgeted cash collections for March to July.
5. Labour budget for March to July.
6. Budgeted cash payments for March to July.
7. Balance in accounts payable and accounts receivable at the end of July.
8. Cost of ending inventory for each ingredient and for finished product on July 31. Round cost per finished good to three decimal places.
9. Cost of goods sold for each month March to July. Include total column for the period.
10. Gross profit margin for each month March to July. Include total column for the period.