1. From previous experience, Management has determined that finished goods ending inventory equal to 25% of the next months unit sales are required to fit the buyers demands.

2. Part # 857 requires one type of raw material: Plastic

• Each Auto Part # 857 requires 1.6 kilograms of Plastic at the cost of $1.75 per kilogram.
• The supplier of Plastic tends to be somewhat erratic, so Auto Parts Ltd finds it necessary to maintain an inventory balance equal to 20% of the material needed for the next month as a precaution against stock-outs. The direct material on June 30 is 42,400 Kg.

3. The beginning accounts payable will consist of $113,680.

4. Auto Parts Ltd pays for 60% of a months purchases in the month of purchase and 40% in the following month.

5. The manufacturing overhead is based on direct labour hours. The workers receive an average of $15.00 per hour, including employee benefits. Each Auto Parts # 857 takes 12 minutes to complete.

6. Auto Parts Ltd allocates the manufacturing overhead based on direct labour hours; The variable manufacturing overhead is as follows: Maintenance $0.40; Utilities $0.60; Indirect

Labor $0.60; Indirect materials $0.40

7. The Monthly Fixed manufacturing overhead costs are as follows:

Janitorial $2,500

Insurance $1,750

Depreciation $15,200

Property Taxes $2,100

Salaries $44,800

Three months property taxes are prepaid on the first day of the first month of the quarter.

8. Auto Parts Ltd allocates the selling and administration expenses based on unit sales; The variable selling and administration rate is $1.5 per unit of sales.

9. The Monthly Selling and administrative expenses are

Salaries		$62,100
Other fixed costs		$4,600
Insurance		$1,200
Depreciation		$2,800
Advertising		$12,000

10. Sales are on account (credit); 60% of the sales are collected during the month of sales and 40% the following month. This was the same collection pattern as in previous years.

11. The company wants to maintain at the end of each month a minimum bank balance of $1,000,000. In case the company has a deficiency of money or is not able to reach this minimum bank balance, the company can borrow from a line of credit at the rate of 12% per annum. All borrowing is considered to happen on the first day of the month, and repayments are on the last day of the month. All borrowings and repayments from the bank should be in multiples of $5,000. It pays interest monthly. The cash balance on June 30 is $184,000.

12. In August, $950,000 of new equipment to update operations will be purchased with cash.

13. Three months insurance is prepaid on the first day of the first month of the quarter. In addition, at the end of each quarter, the company pays $250,000 in dividends.

14.The company has a Common stock beginning balance is $150,840. The Retained Earnings Beginning Balance $600,507.

Required

Prepare 2022, Third Quarter Master Budget for Auto Parts Ltd for the including the following schedules:

1. Prepare the Unit cost

2. Prepare the Cash Budget for the third quarter

3. Prepare the income statement

4. Prepare the statement of financial position

Expected unit sales Unit selling price Total sales Collections from: June July August September Total collection July July AUTO PARTS LTD SALES BUDGET FOR THE THIRD QUARTER OF 2022 September 225000 12 2700000 August 105000 122000 12 12 1260000 1464000 AUTO PARTS LTD SCHEDULE OF EXPECTED COLLECTION FROM CUSTOMERS For the third quarter of 2022 August September 432000 756000 504000 1620000 756000 2124000 1080000 878400 1958400 Total Total 452000 12 5424000 432000 1260000 2700000 878400 4838400 Budgeted sales dd: ending inventory Required units of available production ess: Beginning inventory Budgeted units to be produced Required production in units Inits pf raw material per unit of finished go nits of raw material to meet production dd: Ending inventory of raw material otal units of raw material ess: Opening inventory of raw material aw materials purchased urchase per kg ase cost July July August For the third quarter of 2022 September 225000 30500 255500 56250 199250 105000 56250 161250 26250 135000 AUTO PARTS LTD DIRECT MATERIALS BUDGET For the third quarter of 2022 August 135000 1.6 216000 63760 279760 42400 237360 1.75 415380 199250 1.6 318800 41840 360640 63760 296880 1.75 519540 September Quarter 122000 39250 161250 30500 130750 Total 130750 1.6 209200 45456 254656 41840 212816 1.75 372428 452000 39250 491250 26250 465000 465000 1.6 744000 45456 789456 42400 747056 1.75 130734.8 October 157000 24300 181300 39250 142050 October 142050 1.6 227280 November 162000 Payments for: une uly August September Total payments Jnits required to be produced Labour hours required per unit Total labours required Labour cost per unit Total labour cost AUTO PARTS LTD EXPECTED DIRECT MATERIALS CASH DISBURSEMENT For the third quarter of 2022 113680 249228 166152 311724 362908 477876 July AUTO PARTS LTD DIRECT LABOUR BUDGET For the third quarter of 2022 August 135000 0.2 27000 15 405000 AUTO PARTS LTD 199250 0.2 39850 15 597750 September 207816 228900 436716 130750 0.2 26150 15 392250 Total 465000 0.2 93000 15 1395000 Variable manufacturing overhead: Maintenance Utilities Indirect labour Indirect materials Total -Variable manufacturing overhead per Direct labour hours Total - Variable manufacturing overhead Fixed expense: Janitorial Insurance Depreciation Property taxes Salaries Total - Fixed manufacturing Manufacturing overhead July MANUFACTURING OVERHEAD BUDGET For the third quarter of 2022 August 0.4 0.6 0.6 0.4 2 27000 54000 2500 1750 15200 2100 44800 66350 120350 0.4 0.6 0.6 0.4 2 39850 79700 2500 1750 15200 2100 44800 66350 146050 September 0.4 0.6 0.6 0.4 2 26150 52300 2500 1750 15200 2100 44800 66350 118650 Total 186000 199050 385050 Expected unit sales Unit selling price Total sales Collections from: June July August September Total collection July July AUTO PARTS LTD SALES BUDGET FOR THE THIRD QUARTER OF 2022 September 225000 12 2700000 August 105000 122000 12 12 1260000 1464000 AUTO PARTS LTD SCHEDULE OF EXPECTED COLLECTION FROM CUSTOMERS For the third quarter of 2022 August September 432000 756000 504000 1620000 756000 2124000 1080000 878400 1958400 Total Total 452000 12 5424000 432000 1260000 2700000 878400 4838400 Budgeted sales dd: ending inventory Required units of available production ess: Beginning inventory Budgeted units to be produced Required production in units Inits pf raw material per unit of finished go nits of raw material to meet production dd: Ending inventory of raw material otal units of raw material ess: Opening inventory of raw material aw materials purchased urchase per kg ase cost July July August For the third quarter of 2022 September 225000 30500 255500 56250 199250 105000 56250 161250 26250 135000 AUTO PARTS LTD DIRECT MATERIALS BUDGET For the third quarter of 2022 August 135000 1.6 216000 63760 279760 42400 237360 1.75 415380 199250 1.6 318800 41840 360640 63760 296880 1.75 519540 September Quarter 122000 39250 161250 30500 130750 Total 130750 1.6 209200 45456 254656 41840 212816 1.75 372428 452000 39250 491250 26250 465000 465000 1.6 744000 45456 789456 42400 747056 1.75 130734.8 October 157000 24300 181300 39250 142050 October 142050 1.6 227280 November 162000 Payments for: une uly August September Total payments Jnits required to be produced Labour hours required per unit Total labours required Labour cost per unit Total labour cost AUTO PARTS LTD EXPECTED DIRECT MATERIALS CASH DISBURSEMENT For the third quarter of 2022 113680 249228 166152 311724 362908 477876 July AUTO PARTS LTD DIRECT LABOUR BUDGET For the third quarter of 2022 August 135000 0.2 27000 15 405000 AUTO PARTS LTD 199250 0.2 39850 15 597750 September 207816 228900 436716 130750 0.2 26150 15 392250 Total 465000 0.2 93000 15 1395000 Variable manufacturing overhead: Maintenance Utilities Indirect labour Indirect materials Total -Variable manufacturing overhead per Direct labour hours Total - Variable manufacturing overhead Fixed expense: Janitorial Insurance Depreciation Property taxes Salaries Total - Fixed manufacturing Manufacturing overhead July MANUFACTURING OVERHEAD BUDGET For the third quarter of 2022 August 0.4 0.6 0.6 0.4 2 27000 54000 2500 1750 15200 2100 44800 66350 120350 0.4 0.6 0.6 0.4 2 39850 79700 2500 1750 15200 2100 44800 66350 146050 September 0.4 0.6 0.6 0.4 2 26150 52300 2500 1750 15200 2100 44800 66350 118650 Total 186000 199050 385050