Help is appreciated!

Requirement:

Your task is to make an executive summary that includes the following:

• A summary of the overall master budget.
• Three benefits that the organization can expect to realize from budgeting.
• How the master budget can influence Teresal's overall strategy. The rest will include all of the required items in the master budget along with brief notes explaining what each of the budgets represents.

Case Details:

Teresal Manufacturing Ltd. makes medical grade face shields that are sold to hospitals and clinics across the country. The facemasks are unique because they are a unibody design that use only one raw material. Each face shield is super light, sturdy, and sells for $10 per unit. Molly Brock has just been hired as an accounting consultant by the company and has been requested to make a master budget for the upcoming quarter. The date is January 3, 2021 and Molly needs to prepare the budget for January to March, inclusive. The company is fairly new and has not had to make a master budget before. Luckily, the owner of the company, Teresa Lombardi, knows the importance of keeping accurate financial information after taking accounting courses at the University. Molly should be able to find all of the information she needs stored in the company's cloud servers. The following data regarding financial information and company policy is what Molly was able to find to help her complete the master budget:

• In December 2020, actual sales were $70,000 and the marketing manager predicts that sales for the next few months will be 8,000 units in January, 9,200 units in February, 9,900 units in March, 9,700 units in April, and 8,500 units in May. Sales are 30% cash and 70% on credit and all credit sales are collected in the month following the sale.
• Teresal's manufacturing policy states that each month's ending inventory of finished goods should be 25% of the following month's sales (in units).
• Raw materials for the face shields are purchased from a local supplier, which Teresal buys partially on account. Molly couldn't find a specific policy, but it looks like the Teresal pays 20% of the Accounts Payable during the month of the purchase and the remainder of the expense in the following month.
• Molly was able to find a bill of materials and found that each face shield requires two ounces or direct material, which costs $2.00 per ounce. The policy for Teresal is to have 10% of the following month's production needs in ending raw materials inventory.
• Records show the following manufacturing conversion costs: Factory rent of $5,000, other fixed manufacturing overhead of $3,000, and variable manufacturing overhead of $1.20 per unit. No depreciation figures were included in those figures and all conversion cost expenses are paid in the month that they are incurred.
• Molly was also informed that the company plans to upgrade its office equipment and computers. The owner's office will be upgraded in January and will cost $5,000. The manufacturing offices will be upgraded in February and will cost $12,000. Finally, support offices will be upgraded in March at a cost of $16,000. All of the upgrades will be paid in cash during the month that they are performed.
• Selling and administrative expenses total $1,000 per month for fixed and $1.00 per unit sold for variable. These expenses are all paid in the month in which they occur.
• Molly could not find any depreciation information explicitly but was able to find out information about the value of the company's owned buildings and equipment. She estimates that depreciation would total $5,000 for existing buildings plus an additional $1,000 for new office equipment purchases for the upcoming quarter overall.
• According to the owner, she would like the company to have at least $4,000 in ending cash balance every month. They have a $100,000 line of credit at Royal Bank to ensure that they have that amount even if disbursements exceed receipts. The company can borrow in increments of $1,000 at the beginning of each month and the interest rate on the line of credit is 12% per annum but is not compounded. Ms. Lombardy would like to evaluate and pay back as much of the line of credit and accumulated interest as possible, but not until the end of the quarter.
• Molly was able to find last year's tax return for the company and noted that the tax rate was about 30% of operating income less interest expenses. The owner tells Molly that last year they had a huge tax bill at the end of the year, so she would like to budget an interim tax payment to Canada Revenue of $10,000 at the end of February.

A pared down version of the balance sheet for December 31st, 2020 was as follows:

Teresal Manufacturing Ltd. Balance Sheet As at December 31, 2020 Cash $4,500 Accounts receivable, net $49,000 Inventory $15,320 Property, plant, and equipment, net $121,500 Accounts payable $42,400 Capital stock $125,000 Retained earnings $22,920