Golden Wolves Statue Company Master Budgeting (Assignment #5) 50 points Business started off great the first year that the Golden Wolves Statues started production. Corey realized, however, that the business was seasonal and had peak sales in the fall, during the third quarter, when the students started college and continued through the beginning of the football season. The following information concerns operations for Year 2, the coming year, and for the first two quarters of Year 3. A. Golden Wolves Statue Company is now making only the forward-facing statue with the Alvernia University t-shirt and sells the product for $150/unit. Budgeted unit sales for the next six quarters are as follows (all sales are on credit). Year 2 Quarter Year 3 Quarter Budgeted unit sales 400 600 1000 500 550 680 B. Sales are collected in the following pattern: 75% in the quarter the sales are made, and the remaining 25% in the following quarter. On January 1, Year 2, the companys balance sheet shows $6,500 in accounts receivable, all of which will be collected in the first quarter of the year. Bad debts are negligible and can be ignored. C. The company desires an ending finished goods inventory at the end of each quarter equal to 30% of budgeted unit sales for the next quarter. On December 31, Year 1, the company had 400 units on hand. D. As you know from the cost table, 2 pounds of resin, 1 t-shirt, and a box are required to complete one unit of the product. As stated above, the company has sufficient t-shirts and boxes to last through Year 3 due to a gift. The company requires ending raw materials inventory at the end of each quarter equal to 10% of the following quarters production needs. On December 31, Year 1, the company had 230 pounds of resin on hand. E. The price of the resin and the t-shirts stayed the same as presented in the cost table - $4.00 per pound of resin (2 lbs per statue), $0.75 per t-shirt and $0.40 per box. Raw material purchases are paid for in the following pattern: 60% paid in the quarter the purchases are made, and the remaining 40% paid in the following quarter. Golden Wolves Statues was given a gift of enough t-shirts and boxes at the end of Year 1 to last through Year 3. On January 1, Year 2, the companys balance sheet showed $366 in accounts payable for the total of resin raw material, all of which will be paid for in the first quarter of the year. 12341 2 Assignment: Prepare the following budgets and schedules for the Year 2, showing both quarterly and total figures: 1. 2. 3. A sales budget and a schedule of expected cash collections A production budget A direct material budget and a schedule of expected cash payments for purchases of materials. Use the charts below for your answers: 1. The sales budget: Budgeted unit sales Total Sales Based on the budgeted sales above, the schedule of expected cash collections is prepared as follows (Leave any box blank which does not need to be filled in): Budgeted unit sales 400 600 1000 500 550 Year 2 Quarter 1 2 3 4 Year 2 Selling price per unit Year 2 Quarter 1 2 3 4 Year 2 Beginning accounts receivable N/A N/A N/A First quarter sales ($60,000 x 75% in quarter 1, 25% in quarter 2) N/A N/A Second quarter sales (sales ($90,000 x 75% in quarter 2, 25% in quarter 3) N/A N/A Third quarter sales sales ($150,000 x 75% in quarter 3, 25% in quarter 4) N/A N/A Fourth quarter sales sales ($75,000 x 75% in quarter 4) N/A N/A N/A Total cash collections N/A N/A N/A N/A 2. Based on the sales budget in units, the production budget is prepared as follows: Budgeted unit sales Total needs N/A Required production N/A *30% of the following quarters budgeted unit sales 3. Based on the production budget, resin raw materials will need to be purchased during the year as follows: Required production in units of finished goods Units of raw materials needed to meet production Total units of raw materials N/A needed Units of raw materials to be N/A purchases Cost of raw materials to be N/A purchased *10% of the following quarters production needs in pounds Year 2 Quarter Year 3 Quarter 1 2 3 4 Year 2 1 2 Add desired ending finished goods inventory* N/A Less beginning finished goods inventory N/A Year 2 Quarter Year 3 Quarter 1 2 3 4 Year 2 1 Units of resin raw materials needed per unit of finished goods Add desired units of ending raw materials inventory * N/A Less units of beginning raw materials inventory N/A Unit cost of raw materials N/A Based on the raw material purchases above, expected cash payments are computed as follows (leave any box blank which does not need to be filled in): Beginning accounts payable N/A N/A N/A Year 2 Quarter 1 2 3 4 Year 2 First quarter purchases ($1,096 x 60% in quarter 1 and x 40% in quarter 2) N/A N/A Second quarter purchases ($5,864 x 60% in quarter 2 and x 40% in quarter 3) N/A N/A Third quarter purchases ($6,532 x 60% in quarter 3 and x 40% in quarter 4) N/A N/A Fourth quarter purchases N/A N/A N/A ($4,420 x 60% in quarter 4) Total cash disbursements