Dye-Aspora, Inc manufactures a red industrial dye. The company is preparing its master budget for the first quarter and has presented you with the following information. 1. The December 31, 20XX, balance sheet for the company follows. DYE-ASPORA, Incorporated Balance Sheet December 31, 20XX Assets Liabilities and Stockholder Equity Cash $8,050 Accounts Payable $20,200 Accounts Receivable 53,600 Notes Payable 25,000 Raw Materials 2,000 Dividends Payable 25,000 Inventory Finished Goods Total 4,375 70,200 Inventory Liabilities Prepaid Insurance 1,600 Common Stock 80,000 Building 300,000 Paid-in Capital 30,000 Retained Acc Depreciation (95,000) 94,425 205,000 Earnings 204,425 Total Liabilities and Total Assets $274,625 $274,625 Equity 2. The Accounts Receivable balance on December 31 st represents the remaining balances of November and December sales: $80,000 and $104,000, respectively. 3. Estimated sales in gallons of dye for January through May follow: January 8,000 February 9,000 March 11,000 April 12,000 ay 11,000 Each gallon of dye sells for $16.00. 4. The collection pattern for accounts receivable is as follows: 60% in the month of sale, 25% the month after sale, and 15% the second month after sale. Dye-Aspora expects no bad debts and gives no cash discounts. 5. Each gallon of dye has the following standard quantities and costs for direct materials and direct labor: Quantity Cost/rate Std Cost Mordant (DM) $2.00 $15.00 $2.80 $4.50 1.40 Gal Direct labor 0.30 Hr Some evaporation loss occurs during processing. Variable overhead (VOH) is applied basis machine-hours. The processing of 1 gallon of dye takes 3 MH. The variable overhead rate is $0.10 per MH. VOH is entirely of utility costs. FOH is applied per gallon based on an expected annual capacity of 120,000 gallons. Fixed overhead is incurred evenly throughout the year. Fixed overhead per year is composed of the following costs: $84,600 17,400 4,800 Salaries Utilities Insurance-factory Depreciation-factory 31,200 6. There is no beginning work in process inventory. All work in process is completed in the period in which it is started. Raw materials inventory at the beginning of the year consists of 1,000 gallons of Mordant. There are 500 gallons of dye in finished goods inventory at the beginning of the year carried at standard cost. 7. Accounts Payable relates solely to raw material and is paid 60 percent in the month of purchase and 40 percent in the month after purchase. No discounts are given for prompt ayment. 8. The dividend will be paid in January. 9. A new piece of equipment costing $10,000 will be purchased on March 1. Payment of 60 percent will be made in March and 40 percent in April. The equipment has a useful life of three years and will have no salvage value. The equipment will be placed in service April 2. 10. The note payable has a 6% interest rate; interest is paid at the end of each month. The principal of the note is repaid as cash is available to do so. 11. Dye-Aspora's management has set a minimum cash balance at $6,000. Borrowings are made in $1000 increments. The line of credit is at 9% per year. 12. The ending finished goods inventory should include 25 percent of the next month's needs. The ending inventory of raw materials also should be 20 percent of the next month's needs. This is not true at the beginning of January due to a miscalculation in sales for December. 13. Monthly selling and administrative costs are paid cash. Per month costs are as ows: Salaries $15,000 Utilities 1800 Office Rent 8,000 Required: Prepare a master budget, by month, for the first quarter including quarterly totals and the pro- forma income statement and balance sheet as of March 31st.