Estimated Sales price for next year is $200 per unit $200 Sales Forecast Month Year 2019 2019 2019 2019 2019 January February March April May June July August September October November December 2019 2019 2019 2019 2019 2019 Units 10,000 12,000 9,500 8,500 13,000 14,000 9,500 10,000 7,000 9,000 12,000 14,000 9,000 10,000 128,500 2019 2020 January February 2020 Desired Ending Finished Goods Inventory in units Finished Goods Inventory on December 31, 2018 Desired Ending Raw Materials Inventory 10% next month's sales in units 1,150 units 20% next month's material needs for production 10,050 pounds of material 5 pounds of material $7 per pound Raw Materials Ending Inventory, December 31, 2018 Raw Material needed for each unit The standard price of Raw Material 40% Payments for purchases of Raw Materials follow this pattern: Paid in the month of the purchase Paid in the month following the purchase Accounts Payable, December 31, 2018 paid paid 60% $211,050 Direct Labor hours need for each unit Direct Labor rate Labor guaranteed hours per month Overtime rate Labor is paid on the last day of each month for the current month 0.5 $30 6,000 150% hours per hour hours of the regular labor rate 15 Variable Overhead is estimated based on the machine hours needed for planned production. Machine hours needed per unit machine hours Lubricant estimate per machine hour $0.0250 per machine hour Utility estimate per machine hour $0.0125 per machine hour Lubricants and Utilities are paid for in the same month they are incurred. . Fixed Manufacturing Overhead Estimates for 2019 (in total) Machine Depreciation Plant Depreciation Plant Manager's Salary Supervisor's Salary Factory Property Tax Factory Insurance C Plant Maintenance Total Fixed Overhead Costs $240,000 $480,000 $120,000 $60,000 $72,000 $36,000 $144,000 $1,152,000 . Property Tax is paid in June and December. Half is paid each time. Factory Insurance is prepaid on January 1 for half the year and on July 1 for the remaining portion of the year Salaries are paid in the same month they are incurred. Plant Maintenance is paid for evenly throughout the year. Selling & Administrative Estimates for 2019 Variable Selling & Administrative Sales Commissions Freight Out 10% of Revenue of Revenue 1% Fixed Selling & Administrative Costs Advertising Research & Development Administrative Salaries Office Depreciation Office Equipment Depreciation Marketing Salaries Total Fixed Selling & Administrative Cost $1,200,000 $2,400,000 $1,800,000 $360,000 $72,000 $600,000 $6,432,000 . Sales Commissions are paid the month following the sale. Freight Out is paid in the month of the sale. Sales Commissions for December 2018 $250,000 All salaries are paid in the month they are incurred Advertising is prepaid quarterly in even amounts in January, April, July and October. 1096 of total sales . Sales Receipts Information Cash Sales Credit Sales Collections Collected in the month of the sale Collected one month after the sale Not collected Accounts Receivable, December 31, 2018 . 5096 4596 596 $281,250 of credit sales of credit sales of credit sales . . . . Dividends are paid in March and September. March Dividends September Dividends Bank Note Payment in May Cash Balance, December 31, 2018 Minimum Cash Balance for next year (each month) All borrowing occurs at the beginning of the month Principle is repaid as funds are available at the end of the month Interest is paid as accrued each month. The interest rate charged by the bank is annual simple interest of: $600,000 $800,000 $500,000 $800,000 $2,500,000 . . . . 696 Liabilities Accounts Payable Sales Commissions Payable Notes Payable Assets Cash Acounts Receivable Raw materials Inventory Work in Process Finished Goods Inventory Total Current Assets Equipment less Accumulated Depreciation Plant and Buildings less Accumulated Depreciation Total Long-Term Assets Total Assets Total Liabilities $800,000 $281,250 $70,350 $0 $69,000 $1,220,600 $7,800,000 ($1,680,000) $6,120,000 $15,200,000 ($3,400,000) $6,800,000 $12,920,000 $14,140,600 Common Stock Retained Earnings Total Stockholder's Equity Total Liabilities & Stockholder's Equity E. Direct Labor Budget Production in Units Direct Labor Hours per Unit Total DLH Needed for Production Guaranteed Regular Hours Regular Labor Rate Total Regular Direct Labor Cost Overtime Hours Overtime Rate Total Overtime Direct Labor Cost Total Direct Labor Cost F. Variable Manufacturing Overhead Budget tion in Units Machine Hours per Unit Total Machine Hours Needed Lubricant Utilities Total Variable Manufacturing Overhead Costs G. Fixed Manufacturing Overhead Budget Machine Depreciation Plant Depreciation Plant Manager's Salary Supervisor's Salary Factory Property Tax Factory Insurance Plant Maintenance Total Fixed Manufacturing Overhead Costs H. Cash Disbursements for Manufacturing Overhead Variable Manufacturing Overhead Lubricant Utilities Total Variable Manufacturing Overhead Fixed Manufacturing Overhead Plant Manager's Salary Supervisor's Salary Factory Property Tax Factory Insurance Plant Maintenance Total Fixed Manufacturing Overhead Costs Total Manufacuring Overhead Costs Estimated Sales price for next year is $200 per unit $200 Sales Forecast Month Year 2019 2019 2019 2019 2019 January February March April May June July August September October November December 2019 2019 2019 2019 2019 2019 Units 10,000 12,000 9,500 8,500 13,000 14,000 9,500 10,000 7,000 9,000 12,000 14,000 9,000 10,000 128,500 2019 2020 January February 2020 Desired Ending Finished Goods Inventory in units Finished Goods Inventory on December 31, 2018 Desired Ending Raw Materials Inventory 10% next month's sales in units 1,150 units 20% next month's material needs for production 10,050 pounds of material 5 pounds of material $7 per pound Raw Materials Ending Inventory, December 31, 2018 Raw Material needed for each unit The standard price of Raw Material 40% Payments for purchases of Raw Materials follow this pattern: Paid in the month of the purchase Paid in the month following the purchase Accounts Payable, December 31, 2018 paid paid 60% $211,050 Direct Labor hours need for each unit Direct Labor rate Labor guaranteed hours per month Overtime rate Labor is paid on the last day of each month for the current month 0.5 $30 6,000 150% hours per hour hours of the regular labor rate 15 Variable Overhead is estimated based on the machine hours needed for planned production. Machine hours needed per unit machine hours Lubricant estimate per machine hour $0.0250 per machine hour Utility estimate per machine hour $0.0125 per machine hour Lubricants and Utilities are paid for in the same month they are incurred. . Fixed Manufacturing Overhead Estimates for 2019 (in total) Machine Depreciation Plant Depreciation Plant Manager's Salary Supervisor's Salary Factory Property Tax Factory Insurance C Plant Maintenance Total Fixed Overhead Costs $240,000 $480,000 $120,000 $60,000 $72,000 $36,000 $144,000 $1,152,000 . Property Tax is paid in June and December. Half is paid each time. Factory Insurance is prepaid on January 1 for half the year and on July 1 for the remaining portion of the year Salaries are paid in the same month they are incurred. Plant Maintenance is paid for evenly throughout the year. Selling & Administrative Estimates for 2019 Variable Selling & Administrative Sales Commissions Freight Out 10% of Revenue of Revenue 1% Fixed Selling & Administrative Costs Advertising Research & Development Administrative Salaries Office Depreciation Office Equipment Depreciation Marketing Salaries Total Fixed Selling & Administrative Cost $1,200,000 $2,400,000 $1,800,000 $360,000 $72,000 $600,000 $6,432,000 . Sales Commissions are paid the month following the sale. Freight Out is paid in the month of the sale. Sales Commissions for December 2018 $250,000 All salaries are paid in the month they are incurred Advertising is prepaid quarterly in even amounts in January, April, July and October. 1096 of total sales . Sales Receipts Information Cash Sales Credit Sales Collections Collected in the month of the sale Collected one month after the sale Not collected Accounts Receivable, December 31, 2018 . 5096 4596 596 $281,250 of credit sales of credit sales of credit sales . . . . Dividends are paid in March and September. March Dividends September Dividends Bank Note Payment in May Cash Balance, December 31, 2018 Minimum Cash Balance for next year (each month) All borrowing occurs at the beginning of the month Principle is repaid as funds are available at the end of the month Interest is paid as accrued each month. The interest rate charged by the bank is annual simple interest of: $600,000 $800,000 $500,000 $800,000 $2,500,000 . . . . 696 Liabilities Accounts Payable Sales Commissions Payable Notes Payable Assets Cash Acounts Receivable Raw materials Inventory Work in Process Finished Goods Inventory Total Current Assets Equipment less Accumulated Depreciation Plant and Buildings less Accumulated Depreciation Total Long-Term Assets Total Assets Total Liabilities $800,000 $281,250 $70,350 $0 $69,000 $1,220,600 $7,800,000 ($1,680,000) $6,120,000 $15,200,000 ($3,400,000) $6,800,000 $12,920,000 $14,140,600 Common Stock Retained Earnings Total Stockholder's Equity Total Liabilities & Stockholder's Equity E. Direct Labor Budget Production in Units Direct Labor Hours per Unit Total DLH Needed for Production Guaranteed Regular Hours Regular Labor Rate Total Regular Direct Labor Cost Overtime Hours Overtime Rate Total Overtime Direct Labor Cost Total Direct Labor Cost F. Variable Manufacturing Overhead Budget tion in Units Machine Hours per Unit Total Machine Hours Needed Lubricant Utilities Total Variable Manufacturing Overhead Costs G. Fixed Manufacturing Overhead Budget Machine Depreciation Plant Depreciation Plant Manager's Salary Supervisor's Salary Factory Property Tax Factory Insurance Plant Maintenance Total Fixed Manufacturing Overhead Costs H. Cash Disbursements for Manufacturing Overhead Variable Manufacturing Overhead Lubricant Utilities Total Variable Manufacturing Overhead Fixed Manufacturing Overhead Plant Manager's Salary Supervisor's Salary Factory Property Tax Factory Insurance Plant Maintenance Total Fixed Manufacturing Overhead Costs Total Manufacuring Overhead Costs