Happy Company, Inc. is preparing budgets for the second quarter ending June 30, 2023. SALES BUDGET Budgeted sales of the companys only product for the next five months are: April......... 30,000 units May .......... 47,000 units June .......... 42,500 units July........... 35,500 units August...... 24,000 units The selling price is $11.95 per unit. SCHEDULE OF EXPECTED CASH COLLECTIONS Additional data: All sales are on account. The company collects 60% of these credit sales in the month of the sale; 35% are collected in the month following sale; and the remaining 5% are uncollectible. The accounts receivable balance on March 31 was $89,270. All of this balance was collectible. PRODUCTION BUDGET Additional data: The company desires to have inventory on hand at the end of each month equal to 12% of the following months budgeted unit sales. On March 31, 3,900 units were on hand. DIRECT MATERIALS BUDGET Additional data: 7 pounds of material are required per unit of product. Management desires to have materials on hand at the end of each month equal to 10% of the following months production needs. The beginning materials inventory was 26,500 pounds. The material costs $0.47 per pound. SCHEDULE OF EXPECTED CASH DISBURSEMENTS FOR MATERIAL Additional data: Sixty percent of a months purchases are paid for in the month of purchase; 40% is paid for in the following month. No discounts are given for early payment. The accounts payable balance on March 31 was $49,135 DIRECTBUDGET Additional data: Each unit produced requires 0.05 hour of direct labor. Each hour of direct labor costs the company $22.25 Management fully adjusts the workforce to the workload each month. MANUFACTURING OVERHEAD BUDGET Additional data: Variable manufacturing overhead is $20.75 per direct labor-hour. Fixed manufacturing overhead is $65,250 per month. This amount includes $27,500 in depreciation, which is not a cash outflow. ENDING FINISHED GOODS INVENTORY BUDGET Additional data: The Company uses absorption costing in its budgeted income statement and balance sheet. Manufacturing overhead is applied to units of product on the basis of direct laborhours. The company has no work in process inventories. SELLING AND ADMINISTRATIVE EXPENSE BUDGET Additional data: Variable selling and administrative expenses are $0.75 per unit sold. Fixed selling and administrative expenses are $74,600 per month and includes $20,300 in depreciation. CASH BUDGET Additional data: 1. A line of credit is available at a local bank that allows the company to borrow up to $100,000 in one-thousand-dollar increments. a. All borrowing occurs at the beginning of the month, and all repayments occur at the end of the month. b. The company does not have to make any payments until the end of the quarter. c. The interest rate is 10% annually. 2. Happy desires a cash balance of at least $35,000 at the end of each month. The cash balance at the beginning of April was $36,000. 3. Cash dividends of $24,000 are to be paid to stockholders in April. 4. Equipment purchases of $108,700 are scheduled for May and $115,250 for June. This equipment will be installed and tested during the second quarter and will not become operational until July, when depreciation charges will commence. Requirement: (In completing all the budgets and financial statements use formulas onlyexcept for the inputs tab and the four items specified in the budgeting project lecture.) (1) Prepare the following budgets for April, May, and June (and second quarter totals): (a) Sales Budget (b) Production Budget (c) Direct Materials Budget (d) Direct Labor Budget (e) Manufacturing Overhead Budget (f) Ending Finished Goods Inventory Budget (g) Selling and Administrative Expense Budget (h) Cash Budget (2) Prepare a budgeted income statement for the quarter ending June 30, 2023, and a budgeted balance statement as of June 30, 2023. Happy Company, Inc. Balance Sheet March 31,2023 Assets Cash $36,000 Accounts receivable 89,270 Raw materials inventory 12,455 Finished goods inventory 26,953 Total current assets $164,678 Land 300,000 Property, plant, and equipment: Buildings and equipment 1,728,250 Less: Accumulated depreciation (789,500) Property, plant and equipment, net 938,750 Total assets 1,403,428 Liabilities and stockholders equity Current liabilities: Accounts payable $49,135 Stockholders' equity: Common stock 300,000 Retained earnings 1,054,293 Total stockholders equity 1,354,293 Total liabilities and stockholder's equity 1,403,428