DUKE Manufacturing is preparing its master budget for the first quarter of the upcoming year. The following data pertain to DUKE Manufacturings operations:

Current Assets as of December 31 (prior year)
Cash	$4,500
Accounts receivable, net	$50,000
Inventory	$15,000
Property, plant, and equipment, net	$122,500
Accounts payable	$42,400
Capital stock	$126,000
Retained earnings	$22,920

Actual sales in December were $70,000. Selling price per units is projected to remain stable at $10 per unit throughout the budget period. Sales for the first five months of the upcoming year are budgeted to be as follows:

January	8,300
February	9,200
March	9,400
April	9,700
May	8,900

DUKE Manufacturing has a policy that states that each months ending inventory of finished goods should be 25% of the following months sales. The unit COGs for December is $6 per unit.

Two pounds of direct material is needed per unit at $2 per pound. Ending inventory of direct materials should be 10% of next months production needs.

Most of the labor at the manufacturing facility is indirect, but there is some direct labor incurred. The direct labor hours per unit is 0.02. The direct labor rate per hour is $10 per hour. All direct labor is paid for in the month in which the work is performed.

Monthly manufacturing overhead costs are $5,000 for factory rent, $1,000 for depreciation, and $2,000 for other fixed manufacturing expenses, and $1.20 per unit for variable manufacturing overhead.

Non-manufacturing expenses are budgeted to be $1 per unit sold plus fixed operating expenses of $1,400 per month.

Sales are 30% cash and 70% credit. All credit sales are collected in the month following the sale.

Of each months direct material purchases, 10% are paid for in the month of purchase, while the remainder is paid for in the month following purchase.

All manufacturing overhead and non-manufacturing expenses are paid in the month in which they are incurred, except for depreciation.

Computer equipment for the administrative offices will be purchased in the upcoming quarter. In January, DUKE Manufacturing will purchase equipment for $6,200 (cash), while Februarys cash expenditure will be $12,000 and Marchs cash expenditure will be $16,800.

Depreciation on the building and equipment for the general and administrative offices is budgeted to be $4,700 for the entire quarter, which includes deprecation on new acquisitions.

DUKE 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 loan is 2% per month simple interest (not compounded). DUKE Manufacturing would pay down on the line of credit balance 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.

The companys income tax rate is projected to be 30% of operating income less interest expense. The company pays $11,000 cash at the end of February in estimated taxes.

Requirement:

Prepare a sales budget for January, February, March and first quarter.

Prepare a production budget for January, February, March and first quarter.

Prepare a direct material budget for January, February, March and first quarter.

Prepare a direct labor budget for January, February, March and first quarter.

Prepare a manufacturing overhead budget for January, February, March and first quarter.

Prepare an operating expense budget for January, February, March and first quarter.

Prepare a cash collection budget for January, February, March and first quarter.

Prepare a cash payment budget for January, February, March and first quarter.

Prepare a combined cash budget for January, February, March and first quarter.

Prepare a budgeted income statement for the quarter ending March 31.