HCJ Corporation is completing their cash budget for the following year. They are going to buy an industrial robot. They will make the acquisition on January 2 of next year, and it will take most of the year to train the personnel and reorganize the production process to take full advantage of the new equipment.

The robot will cost $1,000,000 financed with a a one-year $1,000,000 loan from My Bank and Trust Company. Ive negotiated a repayment schedule of four equal installments on the last day of each quarter.

The interest rate will be 10 percent, and interest payments will be quarterly as well

HCJ Corporation is a manufacturer of metal picture frames. The firms two product lines are designated as S (small frames; 5 x 7 inches) and L (large frames; 8 x10 inches). The primary raw materials are flexible metal strips and 9-inch by 24-inch glass sheets. Other raw materials, such as cardboard backing, are insignificant in cost and are treated as indirect materials.

Here is the provided budget information

1. Sales in the fourth quarter of 20x0 are expected to be 50,000 S frames and 40,000 L frames. Over the next two years, sales in each product line will grow by 5,000 units each quarter over the previous quarter. For example, S frame sales in the first quarter of 20x1 are expected to be 55,000 units.

2. HCJ's sales history indicates that 60 percent of all sales are on credit, with the remainder of the sales in cash. The companys collection experience shows that 80 percent of the credit sales are collected during the quarter in which the sale is made, while the remaining 20 percent is collected in the following quarter. (For simplicity, assume the company is able to collect 100 percent of its accounts receivable.)

3. The S frame sells for $10, and the L frame sells for $15. These prices are expected to hold constant throughout 20x1.

4. HCJ's production team attempts to end each quarter with enough finished-goods inventory in each product line to cover 20 percent of the following quarters sales. Moreover, an attempt is made to end each quarter with 20 percent of the glass sheets needed for the following quarters production. Since metal strips are purchased locally, HCJ buys on a just-in-time basis; inventory is negligible. The purchase and production quantities are shown.

5. All direct-material purchases are made on account, and 80 percent of each quarters purchases are paid in cash during the same quarter as the purchase. The other 20 percent is paid in the next quarter.

6. Indirect materials are purchased as needed and paid for in cash. Work-in-process inventory is negligible.

7. Projected manufacturing costs in 20x1 are as follows:

Direct material:

Metal strips. @ $1 per foot

Glass sheets: $8 per sheet

Direct labor for both products .1 hour @ $20 per hour

Manufacturing overhead: .1 direct-labor hour @ $10 per hour

Total manufacturing cost per unit . S: $7 L: $10

1. Sales budget:

2. Cash receipts budget:

3. Cash disbursements budget: (including purchases of direct materials and payments for same)

4. Summary cash budget:

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Sales figures
	20X0	20X1
	Q4	Q1
S frame unit sales	50,000	55,000
S sales price	$ 10	$ 10
L frame unit sales	40,000	45,000
x L sales price	$ 15	$ 15
40%	Percent of sales made for cash in the quarter of sale
60%	Percent of sales made on credit
Collections
80%	of current quarter's credit sales
20%	of previous quarter's credit sales
Purchases	20X0	20X1
	Q4	Q1	Q2	Q3	Q4	Year
Direct Material purchases
Metal (pounds)	225,000	250,000	275000	300,000	325000	1,150,000
Metal price/pound	$1	$1	$1	$1	$1	$1
Glass sheets
Total glass needed for production	33,250	37,000	40,750	44,500	48,250	170,500
Plus desired ending inventory	7,400	8,150	8,900	9,650	10,400	10,400
Total glass needed for production	40,650	45,150	49,650	54,150	58,650	207,600
Less beginning	6,650	7,400	8,150	8,900	9,650	7,400
Glass purchases(sheets)	34,000	37,750	41,500	45,250	49,000	173,500
Cost/sheet	$8	$8	$8	$8	$8	$8
80%	of current quarter's purchases paid in the current quarter
20%	of previous quarter's purchases paid in the current quarter
Other expenses
Direct labor:
Direct-labor hours per frame		0.1
Rate per direct-labor hour		$ 20
Manufacturing overhead:		$ 0.10	DLH at	$ 10	per hour
Indirect material		$ 10,200	$ 11,200	$ 12,200	$ 13,200	$ 46,800
Indirect labor		$ 40,800	$ 44,800	$ 48,800	$ 52,800	$ 187,200
Other		$ 31,000	$ 36,000	$ 41,000	$ 46,000	$ 154,000
Depreciation		$ 20,000	$ 20,000	$ 20,000	$ 20,000	$ 20,000
Predetermined overhead rate	$ 10.00	per DLH
Selling and admin. expenses		$ 100,000	per quarter
Payment of dividends		$ 50,000	per quarter
Balance Sheet as of Dec 21, 20X0
Cash	$ 95,000
Accounts Receivable	$ 132,000
Inventory
Raw Material	$ 59,200
Finished Goods	$ 167,000
Plant and Equipment, net	$ 8,000,000
Total Assets	$ 8,453,200
Accounts payable	$ 99,400
Common stock	$ 5,000,000
Retained earnings	$ 3,353,800
Total Liabilities and equity	$ 8,453,200
Prepare the following
1	Sales budget
2	Cash receipts budget
3	Cash disbursements budget
4	Summary cash budget