DUnique Enterprise, a company that manufactures hair growth oil is preparing for its upcoming financial year (2021). DUnique is seeking a loan from JNT Bank to purchase equipment that will be used to package the oils in anticipation of sales. The loans officer at the bank is requesting the companys upcoming financial years budget to assess their cash position to repay the loan

The following information was used to prepare the master budget for DUnique Enterprise:

1. Sales/Collection

Sales unit in the fourth quarter of 2020 will be 2500 units and is expected to increase by 500 units over each quarter in 2021. Selling price is $60 per unit.

All sales are on account. Management expects future sales collection to follow past experiences. Customers pay 60% in the quarter of sales and40% in the quarter following sales. Accounts receivable for December 31, 2020 is expected to be $60,000.

2. Production

To reduce the risk of a stock-out or idle time, DUnique Co. has maintained an ending inventory policy of 20% of the following quarters sales unit.

3. Direct material

Each bottle of hair growth oil requires four ounces of liquid which cost $3.50 per ounce.

The company wants tomaintain an ending inventory of raw materials equal to 10% of the next quarters production requirements. Ending inventory of raw material for the fourth quarter of 2020 will be 1,520 ounces.

Payments to suppliers for the purchase of direct material are done in two tranches - 70% in the quarter of purchase and 30% the quarter following purchase. Accounts payable of $10,600 at December 31, 2020, is expected to be paid in full in the first quarter of 2021.

4. Direct Labour

As the company is still labour intensive, one bottle takes an employee one hour to package. The standard wages rate of direct labour is $10.00 per hour.

5. Manufacturing Overhead

DUnique Company manufacturing overheads is absorbed on the basis of direct labour hours. The following variable cost rates are:

1. Indirect materials $1.00
2. Indirect labor $1.40
3. Utilities $0.40
4. Maintenance $0.20

DUnique also recognizes the following fixed manufacturing overheads costs per quarter:

Fixed Overhead	$
Supervisors salary	20,000
Depreciation	3,800
Property tax	9,000
maintenance	5,700

6. Selling and Administrative Expense

Variable selling and administrative expense rates per unit of sales are: sales commissions $3.00 and freight-out $1.00.

Fixed expenses for each quarter are:

Fixed Costs	$
Advertising	6,500
sales salaries	15,000
office salaries	4,000
depreciation	3,500
property taxes and insurance	2,500

7. Other expenses

1. Management plans to purchase a delivery truck in the first quarter for $100,000 cash. This will be a loan from the bank in the first quarter of 2021. Interest rate on the loan is 4% per annum.

2. DUnique makes equal quarterly payments of its estimated annual income taxes of $36,000.

8. Other information

The company is expected to have a cash balance of 65,000 on January 1, 2021. The company wants to maintain a minimum cash balance of $15,000.

Loan and interest payments are made in multiples of 10,000 in the earliest quarter in which there is sufficient cash (that is, when the cash on hand exceeds the $15,000 minimum required balance).

Required

Prepare the following budgets:

1. Labour [11 marks]
2. Manufacturing overheads [29 marks]
3. Selling and admin [20 marks]
4. Cash budget [36 marks]

4,000 15,000 1) Sales Budget 2021 Quater Quater? Quaten3 Quater a year mebel Expected Budgeted 3,500 300C 4,500 unitsales unit selling pore $60 $60 $60 $60 Budgeted scales $50,000 $63.000 $72,000 $ 270,000 in dollary (2) schedule of expected cob collection from $60 $81,000 (2) schedule of expected Cagh collection from Sales crater Quater aray heart todas Collection from on account sales: Accounts Receivable Dec 31, 2012 $60,000 Geral Sales ($54,000 * 60% $32,400 $21,600 in QIRl & bal in QTR 2 6782 Sales (60%.n @TR2 $37,800 $75,200 407. in aTR3) OTR 3 Saleg 60%.?NATR3;409.cn $43,200 $28.800 Q9R4) AIRU (60% in ATRA) Total expected cash collection $92,400 $59,400 $68,400 $77 400 $99160 $48,600 3. Production Budget:- Ngeby. &TRI ATRI Yemen hotel 5.coc |QTR2QTR3 QTR 4 Budget unit sales 3,000 3,500 4,000 4,500 pley: Desised finished goods Ending inventory (20% of next 700 800 900 1000 quateni's Salejimat ) Totul needs 3,700 4300 400 5,500 less: felirated finished goody 600 700 800 900 Beginning inventory Budgeted production units 3,100 3,600 4,100 4,600 15,400 1. u. merchandise peorchase Budget:- Year Working IQTRIQTR2/QTR3 | QTR ? Tot next need OTR 5,100 4.00 20400 . units to be produced 3,100 3,600 4,100 4,600 Dequires Raw material curve 4:00 4.00 14.00 4:00 per finished unit Raw materialy needed for 12400 14400 16400 18400 production add. Desired Raw materials from l.png Onventory (104.cf pent monty 1440 1640 1840 2040 rew matenicely requirement) Total materials requirement/13840/16040 18280/20440 lexo: Beginning Ditect material im 1520 1440 1640 1840 materials to be purchased 12320 14600 16600 18600 material price per ounce $3.50 $3.50 Hotel cost of direct mater: $43,120 151,100 $58.00 $65,100 $217, - als prochages $3.50 $3.50 4201