For this culminating activity you will create a production budget.

Use this Excel Culminating Project Template, attached, to help you get started with your budget.

You are the president of Campus Sweaters, Inc. Campus Sweaters manufacturers wool pullover v-neck sweaters of various sizes and colors. You are preparing the budgets for the first quarter of 2021 (January, February, and March). You have the following historical and projected sales in units:

Actual or Projected	Month	Units
Actual	November	9,000
Actual	December	8,000
Projected	January	10,000
Projected	February	9,000
Projected	March	5,500
Projected	April	7,000
Projected	May	7,000
Projected	June	7,000

It takes ten skeins of yarn to make one sweater. Each skein costs $1.30. Past experience shows you need to have enough sweaters on-hand to fill the next month as well as 1/2 of the month after of sales (approximately forty-five days). Also, you need enough yarn to manufacture the next months production.

You will have 12,000 sweaters in finished inventory and 80,000 skeins of yarn in raw materials inventory as of December 31, 2020. You purchased $90,000 of yarn in December that must be paid for in January. The Company incurred $7,500 of overhead cost during December 2020, and $13,500 of selling expenses in the last half of December. These also must be paid in January. The company policy is to pay prior month's charges on account on the tenth day of the following month unless otherwise designated.

Income Statements

Actual or Projected Sales	Actual	Actual	Projected	Projected	Projected
Month	November	December	January	February	March
Sales	240,000.00	270,000.00	300,000.00	270,000.00	165,000.00
Cost of sales	144,000.00	162,000.00	180,000.00	162,000.00	99,000.00
Gross margin	96,000.00	108,000.00	120,000.00	108,000.00	66,000.00
Operating Expenses:
Selling	24,000.00	27,000.00	30,000.00	27,000.00	21,000.00
Administration	35,000.00	45,000.00	50,000.00	45,000.00	30,000.00
Rent	10,000.00	10,000.00	10,000.00	10,000.00	10,000.00
Sales salaries	20,000.00	20,000.00	20,000.00	20,000.00	20,000.00
Totals	89,000.00	102,000.00	110,000.00	102,000.00	81,000.00
Operating Income	7,000.00	6,000.00	10,000.00	6,000.00	(15,000.00)

A worker, using a knitting machine, can make five sweaters in an hour. The cost of direct labor per hour, including fringe, is $20.00. You incurred $13,000 of direct labor cost between December 16 and December 31, 2020 which will be paid on January 7, 2021. The manufacturing overhead rate is $5.00 per direct labor hour. All sweaters are sold wholesale to retail outlets at $30.00 each.

Salaries and wages are paid as follows: The pay period from the first to the fifteenth of the month is paid on the twenty-second day of each month; the pay period from the sixteenth to the thirty-first is paid on the seventh day of the following month.

Rent is paid in advance on the first day of each month. Fifty percent of the selling expenses are paid in the month incurred, and fifty percent in the following month. All manufacturing overhead and administrative costs are paid on the tenth day of the following month.

20% of the sales are collected in the month of sale. 70% are collected in the next month, and 5% percent are collected in the third month. The cash balance at the beginning of January is $30,000.

>Use the information above to complete the following activities:

Step 01: Prepare a production budget for Campus Sweaters, Inc. for each of the following months: January, February, March 2021.

Step 02: Prepare a raw materials budget for each month.

Step 03: Prepare a raw materials budget in dollars for each month.

Step 04: Prepare a cost of goods manufactured schedule for each month.

Step 05: Prepare a cash budget for each month.