Developing a Master Budget for a Manufacturing Organization Jacobs Incorporated manufactures a product with a selling price of $50 per unit. Units and monthly cost data follow:

Variable:
Selling and administrative	$5 per unit sold
Direct materials	10 per unit manufactured
Direct labor	10 per unit manufactured
Variable manufacturing overhead	5 per unit manufactured
Fixed:
Selling and administrative	$20,000 per month
Manufacturing (including depreciation of $10,000)	30,000 per month

Jacobs pays all bills in the month incurred. All sales are on account with 50 percent collected the month of sale and the balance collected the following month. There are no sales discounts or bad debts. Jacobs desires to maintain an ending finished goods inventory equal to 20 percent of the following month's sales and a raw materials inventory equal to 10 percent of the following month's production. January 1, 2011, inventories are in line with these policies. Actual unit sales for December and budgeted unit sales for January, February, and March of 2011 are as follows:

JACOBS INCORPORATED Sales Budget For the Months of January, February, and March 2011
Month	December	January	February	March
Sales - Units	5,250	6,000	9,000	9,000
Sales - Dollars	$262,500	$300,000	$450,000	$450,000

Additional information:

The January 1 beginning cash is projected as $3,000.

For the purpose of operational budgeting, units in the January 1 inventory of finished goods are valued at variable manufacturing cost.

Each unit of finished product requires one unit of raw materials.

Jacobs intends to pay a cash dividend of $7,000 in January.

NOTE: For the entire problem - do not use any negative signs with your answers unless appropriate for net income(loss) or ending balance.

(a) A production budget for January and February.

JACOBS INCORPORATED Production Budget For the Months of January and February 2011
	January	February	March
Requirements for current sales	Answer 0.00 points out of 1.00	Answer 0.00 points out of 1.00	Answer 0.00 points out of 1.00
Desired ending inventory	Answer 0.00 points out of 1.00	Answer 0.00 points out of 1.00
Total requirements	Answer 0.00 points out of 1.00	Answer 0.00 points out of 1.00
Less beginning inventory	Answer 0.00 points out of 1.00	Answer 0.00 points out of 1.00
Production requirements	Answer 0.00 points out of 1.00	Answer 0.00 points out of 1.00

(b) A purchases budget in units for January.

JACOBS INCORPORATED Purchases Budget For the Month of January 2011
	January	February
Current requirements (units)	Answer 0.00 points out of 1.00	Answer 0.00 points out of 1.00
Desired ending inventory	Answer 0.00 points out of 1.00
Total requirements	Answer 0.00 points out of 1.00
Less beginning inventory	Answer 0.00 points out of 1.00
Purchases (units)	Answer 0.00 points out of 1.00
Purchases (dollars at $10 each)	$Answer 0.00 points out of 1.00

(c) A manufacturing cost budget for January.

JACOBS INCORPORATED Manufacturing Cost Budget For the Month of January 2011
Variable costs
Direct materials	$Answer 0.00 points out of 1.00
Direct labor	Answer 0.00 points out of 1.00
Variable manufacturing overhead	Answer 0.00 points out of 1.00
Total variable costs	Answer 0.00 points out of 1.00
Fixed manufacturing overhead	Answer 0.00 points out of 1.00
Total manufacturing overhead	$Answer 0.00 points out of 1.00

(d) A cash budget for January.

JACOBS INCORPORATED Cash Budget For the Month of January 2011
Beginning balance		$Answer 0.00 points out of 1.00
Receipts:
December sales	$Answer 0.00 points out of 1.00
January sales	Answer 0.00 points out of 1.00	Answer 0.00 points out of 1.00
Total cash available		Answer 0.00 points out of 1.00
Disbursements:
Purchases	Answer 0.00 points out of 1.00
Direct labor	Answer 0.00 points out of 1.00
Variable manufacturing overhead	Answer 0.00 points out of 1.00
Fixed manufacturing overhead (exclude depreciation)	Answer 0.00 points out of 1.00
Variable selling and administrative	Answer 0.00 points out of 1.00
Fixed selling and administrative	Answer 0.00 points out of 1.00
Dividend	Answer 0.00 points out of 1.00	Answer 0.00 points out of 1.00
Ending Balance		$Answer 0.00 points out of 1.00

(e) A budgeted contribution income statement for January.

JACOBS INCORPORATED Budgeted Contribution Income Statement For the Month of January 2011
Sales		$Answer 0.00 points out of 1.00
Less variable costs:
Cost of goods sold	$Answer 0.00 points out of 1.00
Selling and administrative	Answer 0.00 points out of 1.00	Answer 0.00 points out of 1.00
Contribution		Answer 0.00 points out of 1.00
Less fixed costs:
Manufacturing overhead	Answer 0.00 points out of 1.00
Selling and administrative	Answer 0.00 points out of 1.00	Answer 0.00 points out of 1.00
Net income		$Answer 0.00 points out of 1.00

(f) Prepare a cash budget for January assuming management plans to increase the January end raw materials inventory to 100 percent of February's production needs.

JACOBS INCORPORATED Cash Budget with Additional Purchases of Raw Materials For the Month of January 2011
Beginning balance		$Answer 0.00 points out of 1.00
Receipts:
December sales	$Answer 0.00 points out of 1.00
January sales	Answer 0.00 points out of 1.00	Answer 0.00 points out of 1.00
Total cash available		Answer 0.00 points out of 1.00
Disbursements:
Purchases	Answer 0.00 points out of 1.00
Direct labor	Answer 0.00 points out of 1.00
Variable manufacturing overhead	Answer 0.00 points out of 1.00
Fixed manufacturing overhead (exclude depreciation)	Answer 0.00 points out of 1.00
Variable selling and administrative	Answer 0.00 points out of 1.00
Fixed selling and administrative	Answer 0.00 points out of 1.00
Dividend	Answer 0.00 points out of 1.00	Answer 0.00 points out of 1.00
Ending Balance		$Answer 0.00 points out of 1.00

(g) Actions management might consider to resolve the problem indicated in the revised cash budget in part (f) include:

Delaying the cash dividend.

If possible, pay for fifty percent of each month's purchases in during the month and pay for the other fifty percent in the following month, an average of fifteen to sixteen days after receipt.

Obtain a line of credit with a financial institution.

All of the above.