Derry Manufacturing is preparing its master budget for the first quarter of the upcoming year. The following data pertain to Derry Manufacturing's operations: |(Click the icon to view the data.) i (Click the icon to view additional data.) Read the requirements. Requirement 1. Prepare a schedule of cash collections for January, February, and March, and for the quarter in total. Derry Manufacturing Cash Collections Budget For the Quarter Ended March 31 Month January February March Quarter Cash sales Credits sales Total cash collections Current Assets as of December 31 (prior year): Cash $ 4,600 Accounts receivable, net $ 50,000 $ 15,600 $ 121,000 Inventory Property, plant, and equipment, net Accounts payable. Capital stock.. Retained earnings. $ 43,000 $ 123,500 $ 23,100 More Info a. Actual sales in December were $71,000. Selling price per unit is projected to remain stable at $12 per unit throughout the budget period. Sales for the first five months of the upcoming year are budgeted to be as follows: January ........$ 99,600 February $ 118,800 March. $ 115,200 April $ 108,000 May.. $ 103,200 b. Sales are 35% cash and 65% credit. All credit sales are collected in the month following the sale. c. Derry 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. Three pounds of direct material is needed per unit at $2.00 per pound. Ending inventory of direct materials should be 20% of next month's production needs. e. Most of the labor at the manufacturing facility is indirect, but there is some direct labor incurred. The direct labor hours per unit is 0.05. The direct bor rate per hour is $9 per hour. direct labor is paid for the month in which the work is performed. direct labor total cost for each of the upcoming three months is as follows: January $ 3,807 February $ 4,442 March ..... ... $ 4,293 f. Monthly manufacturing overhead costs are $5,500 for factory rent, $2,900 for other fixed manufacturing expenses, and $1.10 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. g. Computer equipment for the administrative offices will be purchased in the upcoming quarter. In January, Derry Manufacturing will purchase equipment for $5,000 (cash), while February's cash expenditure will be $12,200 and March's cash expenditure will be $16,600. h. Operating expenses are budgeted to be $1.25 per unit sold plus fixed operating expenses of $1,800 per month. All operating expenses are paid in the month in which they are incurred. No depreciation is included in these figures. 1. Depreciation on the building and equipment for the general and administrative offices is budgeted to be $4,800 for the entire quarter, which includes depreciation on new acquisitions. j. Derry Manufacturing has a policy that the ending cash balance in each month must be at least $4,000. 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 $160,000. The interest rate on these loans is 1% per month simple interest (not compounded). The company would pay down on the line of credit balance in increments of $1,000 if it has excess funds at the end of the quarter. The company would also pay the accumulated interest at the end of the quarter on the funds borrowed during the quarter. k. The company's income tax rate is projected to be 30% of operating income less interest expense. The company pays $10,000 cash at the end of February in estimated taxes. Print Done