equipment. The control valves are soild so varicas ga and oil engineering throughout the Ueited States. Projected salcs in uzits for the coming four montha ane a foloos 20,000 0,000 The folowing dats pertais to production policies and manafacturing specicatio ollerwed by Leitner a Finished goods inventory on January I is 13,000 unns The deired ending inves tory for eath month is 70 percent of the bext monh's ales b. The data on maeriak used are as folows Okrect Material Part 714 Inventory polioy dictates thar sofficient materials be on hand at the heginning of che month to produce 50 percent of that moeth's catimated sales. This n ccactly the amount of macerial on hand on Jancary 1 c The drect lahor used per anit of output is cwo hours. The average direst laher cot d. Overhead each month is estimated uning a flesible budgxt formuls. (Actirvity n per hour is $15 measured in drect labor hourk) Flued Cost Variable Cost Component Component $1.00 s.pplies 28,000 14,000 Supeisan 7,000 55,000 c Monthly seling sed adminiscrative expenies are also estimated using a lexibls bodgeting formuls.(Actiwity is mesured in units sold. Variable $30,000 5,000 10,000 s0.75 Deprecation Shipping 2.6o a40 f. The unit seling peice of the control valve is $90 the company plans to purchase l land for future expansion . The land costs $90,000 h. All sales and purchases are for cash. Cash balance on January I eqaals $162,900. If the firm develops a cash shortage by the end of the mooth, sufficient cash is boe- rowed to cover the shortage. Any cash borrowed is repaid ooe month later, as is the iscerest due. The interest rate is 12 percent per ancum Required: Prepare a monthly operating budget for the first quarter with the following schedules: I. Sales bodget 2. Production budgrt 3. Direct materials purchases budget 4 Direct laboe budget 5. Overhead budget 6. Selling and administrative expense budget . Ending finished goods inventory budgrt 8. Cost of goods sold budget 9, Budgetod income statement (ignoee income taxes) to Cash budget