Current Attempt in Progress Waterways 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 113,000 Unit sales for December 2019 103,000 Expected unit sales for January 2020 112,000 Expected unit sales for February 2020 112,000 Expected unit sales for March 2020 116.000 Expected unit sales for April 2020 127,000 Expected unit sales for May 2020 137,000 Unit selling price $12 Waterways 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 $185,400. Direct Materials Direct materials cost 80 cents per pound. Two pounds of direct materials are required to produce each unit. Waterways likes to keep 5% of the materials needed for the next month in its ending inventory. Raw Materials on December 31, 2019, totaled 11,200 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 $104,305. Direct Labor Labor requires 12 minutes per unit for completion and is paid at a rate of $9 per hour. Manufacturing Overhead Indirect materials 30 per labor hour Indirect labor 50 per labor hour Utilities 40 per labor hour Maintenance 20 per labor hour Salaries $42,000 per month Depreciation $16,200 per month Property taxes $2,900 per month Insurance $1,300 per month Maintenance $1,400 per month Selling and Administrative Variable selling and administrative cost per unit is $1.80. Advertising $17,000 a month Insurance $1,300 a month Salaries $72,000 a month Depreciation $2,800 a month Other fixed costs $2,900 a month Other Information The Cash balance on December 31, 2019, totaled $100,000, but management has decided it would like to maintain a cash balance of at least $700,000 beginning on January 31, 2020. Dividends are paid each month at the rate of $2.30 per share for 5,170 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 9% interest. Waterways borrows on the first day of the month and repays on the last day of the month. A $490,000 equipment purchase is planned for February. For the first quarter of 2020, prepare a sales budget. Expected Unit Sales January 112000 WATERWAYS CORPORATION Sales Budget March 2020 First Quarter February 112000 Unit Selling Price $ 12 $ 12 $ Total Sales $ $ $ March 116000 12