For the first quarter of 2017, do the following. (a) Prepare a sales budget. This is similar to Illustration 21-3 on page 1088 of your textbook. (b) Prepare a production budget. This is similar to Illustration 21-5 on page 1089 of your textbook. (c) Prepare a direct materials budget. (Round to nearest dollar) This is similar to Illustration 21-7 on page 1091 of your textbook. (d) Prepare a direct labor budget. (For calculations, round to the nearest hour.) This is similar to Illustration 21-9 on page 1094 of your textbook. (e) Prepare a manufacturing overhead budget. (Round intermediate amounts to the nearest dollar.) This is similar to Illustration 21-10 on page 1094 of your textbook. (f) Prepare a selling and administrative budget. This is similar to Illustration 21-11 on page 1095 of your textbook. (g) Prepare a budgeted income statement. (Round intermediate calculations to the nearest dollar.) This is similar to Illustration 21-13 on page 1096 of your textbook. (h) Prepare a cash budget. This is similar to Illustration 21-17 on page 1100 of your textbook. (You will need to prepare schedules for expected collections from customers and expected payments to vendors first. See Illustrations 21-15 and 21-16 on page 1099 of your textbook for guidance.)

Rules: * Use Excel's functionality to your benefit. Points are lost for lack of formula. * Use proper formats for schedules, following the referenced textbook examples. * Use dollar-signs and underscores where appropriate.

Serious Business, Inc. The company is preparing its budget for the coming year, 2017. The first step is to plan for the first quarter of that coming year. The following information has been gathered from their managers.

Sales Information Period Units November 125,000 Actual December 112,000 Actual January 123,000 Planned February 124,000 Planned March 128,000 Planned April 138,000 Planned May 151,000 Planned Unit selling price $13.00

Finished Goods Inventory Planning The company likes to keep 10% of the next months unit sales in finished goods ending inventory.

Accounts Receivable & Collections Sales on Account 100% Collections Activity Month of Sale 95% Month after Sale 5% Balance at 12/31/16 $185,000.00

Materials Inventory Costs & Planning Direct Materials Amount Used per Unit Cost Metal 2 lb $1.00 lb The company likes to keep 5% of the material needed for the next month's production in raw materials ending inventory.

Accounts Payable & Disbursements Purchases on Account 100% Payment Activity Month of Purchase 55% Month after Purchase 45% Balance at 12/31/16 $120,000

Direct Labor & Costs Time per Unit Production 15 minutes Pay Rate/Hour $9.00

Manufacturing Overhead Costs Variable costs per direct labor hour Indirect materials $0.35 Indirect labor 0.55 Utilities 0.45 Maintenance 0.25 Fixed costs per month Salaries $42,000 Depreciation 16,800 Property taxes 2,675 Insurance 1,200 Janitorial 1,300

Selling and Administrative Costs Variable costs per unit sold $1.75 Fixed costs per month Advertising $15,000 Insurance 14,000 Salaries 72,000 Depreciation 25,000 Other fixed costs 3,000

Income Taxes Accrued on Monthly Net Income 45% rounded to nearest dollar Amounts Accrued Q4 2016 paid January 2017 $200,000

Cash and Financing Matters Cash Balance, 12/31/2016 $110,550 2017 Minimum Balance Required 880,000 Monthly Dividends $2.80 per share Outstanding Shares 5,000 Line of Credit Limit None Borrowing Increment Required $1,000 Interest Rate 9% Draws First of Month Repayments Last of Month Interest accumulates to the loan balance and is paid in full with each repayment.

Additional Item Fixed Asset Purchase $550,000 Month February