Excel Assignment # 5

Spring

Northern Illinois Manufacturing is preparing its budget for the coming year. The first step is to plan for the first quarter of that coming year. Northern Illinois gathered the following information from its managers.

Sales:

Unit sates for November, prior year	112,500
Unit sales for December, prior year	102,200
Expected unit sales for January	113,400
Expected unit sales for February	112,500
Expected unit sales for March	116,700
Expected unit sales for April	125,000
Expected unit sales for May	137,500
Unit selling price	$13

Northern Illinois wants to keep 10% of the next months unit sales in ending inventory. All sales are on account. 85% of the Accounts Receivable is collected in the month of sale and 15% of the Accounts Receivable is collected in the month after sale. Accounts receivable on December 31 totaled 183,750 and thistotal is expected to be collected in January.

Direct Materials:

The product uses metal, plastic, and rubber. In total, each unit requires 2 pounds of material at an average cost of 0.75 per pound.

Northern Illinois likes to keep 5% of the materials needed for the next month in its ending inventory. Payment for materials is made within 15 days. 50% is paid in the month of purchase and 50% is paid in the month after purchase. Accounts Payable on December 31 totaled $120,595 and the total will be paid in fullin January. Raw materials in inventory on December 31 totaled 10,355 pounds.

Direct Labor:

Labor requires 12 minutes per unit for completion and is paid at a rate of $18 per hour.

Manufacturing Overhead:

Indirect materials	30 cents per labor hour
Indirect labor	50 cents per labor hour
Utilities	45 cents per labor hour
Maintenance	30 cents per labor hour
Salaries	$42,000 per month
Depreciation	$16,800 per month
Property taxes	$2,700 per month
Insurance	$1,300 per month
Janitorial	$1,400 per month

Selling and Administrative Expenses:

Variable selling and administrative cost per unit is $2.20.

Advertising	$15,000 per month
Insurance	$1,500 per month
Salaries	$71,000 per month
Depreciation	$2,500 per month
Other fixed costs	$3,000 per month

Other Information:

The cash balance on December totaled $220,000, but management has decided that it wants to maintain a cash balance of at least $800,000 beginning January 31. Dividends are paid each month at the rate of $2.70 per share for 5,000 shares outstanding. The company has an open line of credit with the First National Bank. The terms of the agreement requires borrowing to be in $1,000 increments at 6% interest. Northern Illinois borrows on the first day of the month and repays on the last day of the month. Reserve repayment, if required, until the company can pay the entire amount. A $245,000 equipment purchase is planned for February.

Instructions (Do all parts):

Note: All budgets and schedules should be prepared by month for the first quarter (January, February, and March). Round all figures to the nearest dollar. For labor hours round to whole hours.

a. Prepare a sales budget.

b. Prepare a production budget.

c. Prepare a direct materials budget.

d. Prepare a direct labor budget.

e. Prepare a manufacturing overhead budget.

f. Prepare a selling and administrative budget.

g. Prepare a schedule for expected cash collections from customers.

h. Prepare a schedule for expected payments for materials purchases.

i. Prepare a cash budget.