EXHIBIT 1

Sales Price, Production Costs, and Operating Expenses

Sales Price

A dozen cookies sell for $12.05.

Direct Materials Costs

Material	Per Unit Cost
Flour	$ .15
Sugar	$ .15
Eggs	$ .10
Shortening	$ .50
Chocolate Chips	$ 1.25

Any other ingredients are indirect materials and are considered part of manufacturing overhead

Direct Labor Costs

Information regarding direct labor costs is not maintained because you are your only employee. In this case, labor costs are considered part of manufacturing overhead.

Manufacturing Overhead Costs

	Variable costs per dozen	Fixed costs per month
Utilities	$ .50	N/a
Other indirect materials and labor	$ .75	N/a
Maintenance	N/a	$ 250
Depreciation	N/a	$ 500
Totals	$ 1.25	$ 750

Operating Expenses

	Variable costs per dozen	Fixed costs per month
Shipping Costs	$ 1.50	N/a
Salaries	N/a	$ 2,000
Depreciation	N/a	$ 200
Other	N/a	$ 1,450
Totals	$ 1.50	$ 3,650

EXHIBIT 2

Sales Projections, Collections, Purchases, and Payments

Monthly Sales Projections (in dozens of cookies):

January 1,000

February 1,200

March 1,300

April 1,100

You have stopped production of cookies at year end to facilitate the expansion of the business. Therefore, you expect to have no uncollected accounts receivable, unpaid accounts payable, or raw materials inventories at January 1, the beginning of your budget period.

Collections of Sales

Sixty percent (60%) of all sales are collected in the month the sale occurs. Forty percent (40%) of all sales are collected in the month following the sale.

Production

The company produces cookies daily. No work-in-process or finished goods inventories are maintained.

Raw Materials Inventory, Purchases, and Payments

The company plans to maintain an ending inventory of raw materials at the end of each month equal to 10% of the raw materials production needs for the next month.

Twenty-five percent (25%) of materials purchases are paid for in the month of the purchase. Seventy-five percent (75%) of materials purchases are paid for in the month following the purchase.

EXHIBIT 3

Financing Activities and Cookie Ingredients

Financing Activities

January beginning cash balance $10,000

Loan acquired in January $25,000

Equipment purchase in January $20,000

Minimum desired cash balance at the end of each month $10,000

If cash over $10,000 is available at the end of the month, you will make repayments of outstanding loans in multiples of $1,000. If additional borrowing is necessary to maintain the $10,000 end-of-month balance, you have a line of credit with the bank and will borrow additional funds in multiples of $1,000. Interest (12% annual rate) is paid monthly on total outstanding borrowing at the end of the prior month.

Sweetums Cookie Ingredient List (makes 1 dozen cookies)

2 cups flour

1 cups sugar

1 cup shortening

2 cups chocolate chips

2 eggs

1 teaspoons vanilla

1 teaspoon baking soda

1 teaspoon salt

Use the information provided in the Master Budget assignment prompt (posted in Canvas under Week 10) to prepare the direct materials budget for flour for the first quarter.

	January	February	March	Quarter
Dozens of cookies to be produced	1000 1000 Correct	1200 1200 Correct	1300 1300 Correct	3500 3500 Correct
Cups per dozen cookies	Not attempted	Not attempted	Not attempted	Not attempted
Production needs	Not attempted	Not attempted	Not attempted	Not attempted
Add: Desired ending inventory	Not attempted	Not attempted	Not attempted	Not attempted
Total needs	Not attempted	Not attempted	Not attempted	Not attempted
Less: Beginning inventory	Not attempted	Not attempted	Not attempted	Not attempted
Cups to be purchased	Not attempted	Not attempted	Not attempted	Not attempted
Cost per cup	Not attempted	Not attempted	Not attempted	Not attempted
Total cost of flour	Not attempted	Not attempted	Not attempted