Good Evening. I'm asking for assistance with this question for Managerial Accounting. You help is greatly appreciated.
Great Price Inc. Great Price Inc. produces and sells plantain peelers. The company has been in operations for over ten (10) years and have been profitable since then. Its main customers are hoteliers in the tourism sector. The company has a long-term plan that it breaks down in quarterly budgets. On January 1, 2023 the company had a cash balance of $450,000. If the entity needs to borrow any money, it should be repaid in four equal installments on the last day of each quarter. The interest rate will be 15 percent, and interest payments will be quarterly as well. Each finished product requires 1/2 foot of direct material. Other raw materials are insignificant in cost and are treated as indirect materials. Assuming that now is December 2022, the following information has been made available: 1. Sales in December have been projected to be 45,000 units. The marketing and sales manager is anticipating that sales will increase by 500 units each month. This trend is expected to continue for the next two (2) years. 2. The company's sales policy indicates that 60 percent of all sales are on credit, with the remainder of the sales in cash. The company's collection experience shows that 80 percent of the credit sales are collected during the month in which the sale is made, 18 percent is collected in the following month and 2% is deemed uncollectible. 3. The product sells for $550 per unit. These prices are expected to remain constant for the remainder of the year. 4. Sales forecast has been credible over the years and therefore the production manager is confident that there is no need to keep more than 12% of all inventory types in stock. 5. All direct-material purchases are made on credit, and 60 percent of each month's purchases are paid for during the month of purchase. The other 40 percent is paid in the next month. 6. Indirect materials are purchased with cash as needed. Work-in-process is insignificant. 7. Projected manufacturing costs in 2023 are as follows: Direct material 1.5 ft. @ $220 per foot $330 Direct labour 0.2 hour @ $500 per hour $100 Production overhead $250 per direct labour hour $ 50 Total production cost per unit $480 8. The following manufacturing overhead costs are budgeted for 2023. January February March April Indirect material 2,219,520.00 2,088,960.00 1,284,800.00 2,133,840.00 Indirect labour 1,827,840.00 1,508,400.00 1,309,200.00 2,023,680.00 Other overhead 1,538,160.00 1,397,280.00 1,032,000.00 1,632,000.00 Depreciation 979,200.00 979,200.00 979,200.00 979,200.00 Total overhead costs 6,564,720.00 5,973,840.00 4,605,200.00 6,768,720.00 9. Selling and administrative expenses are based on a fixed cost of $80,000 per month plus $3 per unit sold. The fixed portion of selling and administrative expenses will include $71,500 per month for depreciation. 10. The company expects that dividend of $640,000 will be declared and paid in cash at the end of each quarter. 1 1. The minimum ending cash balance per month is expected to be $750,000. Required: Prepare the master budget for Great Price Inc. in the first quarter of 2023 (January - March) and in total by completing the following schedules and statements: (a) Sales budget (prepare December 2022 as well). (5 marks) (b) Schedule of cash collected from customers. (12 marks) (c) Production budget (prepare December 2022 as well). (12 marks) (d) Direct-material budget (prepare December 2022 as well). Hint: partially complete April 2023. (14 marks) (e) Schedule of cash disbursement to suppliers for direct material. (8 marks) (f) Direct labour budget. (6 marks) (g) Selling and administrative budget. (11 marks) (h) Cash budget (37 marks)
