Comprehensive Budgeting Assignment

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Jesper Manufacturing is preparing its master budget for the first quarter of the upcoming year. The following data pertain to Jesper Manufacturing's operations: Current Assets as of December 31 (prior year) Cash Accounts receivable, net Inventory Property, plant, and equipment, net Accounts payable Common stock Retained earnings $4,460 $52,000 $15,400 $122,000 $44,000 $126,860 $23,000 a. Actual sales in December were $76,000. Selling price per unit is projected to remain stable at $9 per unit throughout the budget period. Sales for the first five months of the upcoming year are budgeted to be as follows: January February March April May $80,100 $89,100 $82,800 $85,500 $77,400 b. Sales are 30% cash and 70% credit. All credit sales are collected in the month following the sale. c. Jesper Manufacturing has a policy that states that each month's ending inventory of finished goods should be 10% of the following month's sales in units). d. Of each month's direct material purchases, 20% are paid for in the month of purchase, while the remainder is paid for in the month following purchase. Two kilograms of direct material is needed per unit at $1.40/kg. Ending inventory of direct materials should be 20% of next month's production needs. e. Monthly manufacturing conversion costs are $6,500 for factory rent, $2,900 for other fixed manufacturing expenses, and $1.40 per unit for variable manufacturing overhead. No depreciation is included in these figures. All expenses are paid in the month in which they are incurred. f. Computer equipment for the administrative offices will be purchased in the upcoming quarter. In January, Jesper Manufacturing will purchase equipment for $5,800 (cash), while February's cash expenditure will be $11,600 and March's cash expenditure will be $15,800. g. Operating expenses are budgeted to be $1.20 per unit sold plus fixed operating expenses of $1,400 per month. All operating expenses are paid in the month in which they are incurred. h. Depreciation on the building and equipment for the general and administrative offices is budgeted to be $5,600 for the entire quarter, which includes depreciation on new acquisitions. i. Jesper Manufacturing has a policy that the ending cash balance in each month must be at least $4,400. It has a line of credit with a local bank. The company can borrow in increments of $1,000 at the beginning of each month, up to a total outstanding loan balance of $130,000. The interest rate on these loans is 1% per month simple interest (not compounded). Jesper Manufacturing pays down on the line of credit balance if it has excess funds at the end of the quarter. The company also pays the accumulated interest at the end of the quarter on the funds borrowed during the quarter. j. The company's income tax rate is projected to be 30% of operating income less interest expense. The company pays $10,800 cash at the end of February in estimated taxes. Requirement 3. Prepare a direct materials budget. (Round your answers to the nearest whole dollar. For cost per kg, round your answers to the nearest cent. Abbreviation used: DM = direct material.) March Quarter Jesper Manufacturing Direct Materials Budget January February Units to be produced x kg of DM needed per unit Quantity (kg) needed for production Plus: Desired ending inventory of DM Total quantity (kg) needed Less: Beginning inventory of DM Quantity (kg) to purchase x Cost per kg Total cost of DM purchases Requirement 4. Prepare a cash payments budget for the direct material purchases from Requirement 3. (Round your answers to the nearest cent.) Quarter Jesper Manufacturing Cash Payments for Direct Material Purchases Budget January February March December purchases (from Accounts Payable) January purchases February purchases March purchases Total cash payments for DM purchases Requirement 5. Prepare a cash payments budget for conversion costs. (Round your answers to the nearest whole dollar.) Quarter Jesper Manufacturing Cash Payments for Conversion Costs Budget January February March Variable conversion costs Rent (fixed) Other fixed MOH Total payments for conversion costs Requirement 6. Prepare a cash payments budget for operating expenses. (Round your answers to the nearest whole dollar.) Quarter Jesper Manufacturing Cash Payments for Operating Expenses Budget January February March Variable operating expenses Fixed operating expenses Total payments for operating expenses