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Additional data a. Actual sales in December were $76,000. Selling price per unit is projected to remain stable at $9 per unit throughout the budget period. Sales for the first five months of the upcoming year are budgeted to be as follows: $ 80,100 January February $ 89,100 March $ 82,800 April. $ 85,500 May............$ 77,400 b. Sales are 30% cash and 70% credit. All credit sales are collected in the month following the sale. c. Cranston Manufacturing has a policy that states that each month's ending inventory of finished goods should be 10% of the following month's sales (in units). d. Of each month's direct material purchases, 20% are paid for in the month of purchase, while the remainder is paid for in the month following purchase. Two kilograms of direct material is needed per unit at $1.40/kg. Ending inventory of direct materials should be 20% of next month's production needs. e. Monthly manufacturing conversion costs are $6,500 for factory rent, $2,900 for other fixed manufacturing expenses, and $1.40 per unit for variable manufacturing overhead. No depreciation is included in these figures. All expenses are paid in the month in which they are incurred. f. Computer equipment for the administrative offices will be purchased in the upcoming quarter. In January, Cranston Manufacturing will purchase equipment for $5,800 (cash), while February's cash expenditure will be $11,600 and March's cash expenditure will be $15,800 g. Operating expenses are budgeted to be $1.20 per unit sold plus fixed operating expenses of $1,400 per month. All operating expenses are paid in the month in which they are incurred. h. Depreciation on the building and equipment for the general and administrative offices is budgeted to be $5,600 for the entire quarter, which includes depreciation on new acquisitions. i. Cranston Manufacturing has a policy that the ending cash balance in each month must be at least $4,400. It has a line of credit Additional data March $ 82,800 April $ 85,500 May $ 77,400 b. Sales are 30% cash and 70% credit. All credit sales are collected in the month following the sale. c. Cranston Manufacturing has a policy that states that each month's ending inventory of finished goods should be 10% of the following month's sales (in units). d. Of each month's direct material purchases, 20% are paid for in the month of purchase, while the remainder is paid for in the month following purchase. Two kilograms of direct material is needed per unit at $1.40/kg. Ending inventory of direct materials should be 20% of next month's production needs. e. Monthly manufacturing conversion costs are $6,500 for factory rent, $2,900 for other fixed manufacturing expenses, and $1.40 per unit for variable manufacturing overhead. No depreciation is included in these figures. All expenses are paid in the month in which they are incurred. f. Computer equipment for the administrative offices will be purchased in the upcoming quarter. In January, Cranston Manufacturing will purchase equipment for $5,800 (cash), while February's cash expenditure will be $11,600 and March's cash expenditure will be $15,800 g. Operating expenses are budgeted to be $1.20 per unit sold plus fixed operating expenses of $1,400 per month. All operating expenses are paid in the month in which they are incurred. h. Depreciation on the building and equipment for the general and administrative offices is budgeted to be $5,600 for the entire quarter, which includes depreciation on new acquisitions. i. Cranston Manufacturing has a policy that the ending cash balance in each month must be at least $4,400. It has a line of credit with a local bank. The company can borrow in increments of $1,000 at the beginning of each month, up to a total outstanding loan balance of $110,000. The interest rate on these loans is 1% per month simple interest (not compounded). Cranston Manufacturing pays down on the line of credit balance if it has excess funds at the end of the quarter. The company also pays the accumulated interest at the end of the quarter on the funds borrowed during the quarter. j. The company's income tax rate is projected to be 30% of operating income less interest expense. The company pays $10,800 cash at the end of February in estimated taxes. Data Table $ Current Assets as of December 31 (prior year) Cash Accounts receivable, net Inventory Property, plant, and equipment, net. Accounts payable. Capital stock. Retained earnings $ $ $ 4,460 49,000 15,600 122,500 44,000 123,500 22,900 $ Cranston Manufacturing is preparing its master budget for the first quarter of the upcoming year. The following data pertain to Cranston Manufacturing's operations: (Click the icon to view the data.) (Click the icon to view additional data.) Requirements Requirement 1. Prepare a schedule of cash collections for January, February, and March and for the quarter in total. (Round your answers to the nearest whole dollar.) Cranston Manufacturing March Quarter Cash Collection Budget January February 24030 26730 53200 56070 Cash sales 24840 75600 Credits sales 62730 172000 77230 82800 87570 Total cash collections 247600 Requirement 2. Prepare a production budget. (Hint: Unit sales - Sales in dollars / Selling price per unit.) Cranston Manufacturing Production Budget January February 8900 9900 Quarter March 9200 Unit sales 28000 Plus: Desired ending inventory 990 920 950 2860 Total needed 9890 10820 10150 30860 Less: Beginning inventory (890) (990) (920) (2500) 9900 9830 9230 Units to produce 28960 Less: Beginning inventory (890) (990) (920) (2500) 9900 9830 9230 Units to produce 28960 Requirement 3. Prepare a direct materials budget. (Round your answers to the nearest whole dollar. For cost per kg, round your answers to the nearest cent. Abbreviation used: DM = direct material.) Cranston Manufacturing Direct Materials Budget January February 9900 9830 March Quarter Units to be produced 9230 28960 2 2 2 x kg of DM needed per unit Quantity (kg) needed for production 19800 19660 18460 57920 3932 3692 3764 11388 23732 23352 22224 69308 Plus: Desired ending inventory of DM Total quantity (kg) needed Less: Beginning inventory of DM Quantity (kg) to purchase (3960) (3932) (3692) (11584) 19772 19420 18532 57724 1.40 x Cost per kg 1.40 1.40 1.40 27681 27188 25945 Total cost of DM purchases 80814 Requirement 4. Prepare a cash payments budget for the direct material purchases from Requirement 3. (Leave any unused cells blank. Round your answers to the nearest cent.) Cranston Manufacturing Quarter Cash Payments for Direct Material Purchases Budget January February March December purchases (from Accounts Payable) January purchases February purchases March purchases Total disbursements Requirement 5. Prepare a cash payments budget for conversion costs. (Round your answers to the nearest whole dollar.) Cranston Manufacturing Quarter Cash Payments for Conversion Costs Budget January February March Variable conversion costs Rent (fixed) Other fixed MOH Total payments for conversion costs Requirement 6. Prepare a cash payments budget for operating expenses. (Round your answers to the nearest whole dollar.) Quarter Cranston Manufacturing Cash Payments for Operating Expenses Budget January February March Variable operating expenses Fixed operating expenses Total payments for operating expenses Requirement 7. Prepare a combined cash budget. (Leave any unused cells blank. Use parentheses or a minus sign for negative cash balances and financing payments. Round your answers to the nearest cent.) Cranston Manufacturing Combined Cash Budget January February March Quarter Cash balance, beginning Add cash collections Total cash available Less cash disbursements: Direct material purchases Conversion costs Operating expenses Equipment purchases Tax payment Total cash payments Excess (deficiency) of cash Financing Borrowings Repayments Interest payments Total Financing Borrowings Repayments Interest payments Total financing Ending cash balance Requirement 8. Calculate the budgeted manufacturing cost per unit. (Assume that fixed manufacturing overhead is budgeted to be $0.70 per unit for the year.) (Round your answers to the nearest cent.) Cranston Manufacturing Budgeted Manufacturing Cost per Unit Direct materials cost per unit Conversion costs per unit Fixed manufacturing overhead per unit Budgeted cost of manufacturing each unit Requirement 9. Prepare a budgeted income statement for the quarter ending March 31. (Hint: Cost of goods sold = Budgeted cost of manufacturing each unit x Number of units sold.) (Round your answers to the nearest whole dollar.) Cranston Manufacturing Budgeted Income Statement For the Quarter Ending March 31 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense Operating income Less: interest expense Less: provision for income taxes Net income