I could use a little help on question e.

Developing a Master Budget for a Manufacturing Organization Jacobs Incorporated manufactures a product with a selling price of $50 per unit. Units and monthly cost data follow:

Variable:
Selling and administrative	$ 4 per unit sold
Direct materials	$ 10 per unit manufactured
Direct labor	$ 10 per unit manufactured
Variable manufacturing overhead	$ 5 per unit manufactured
Fixed:
Selling and administrative	$15,000 per month
Manufacturing (including depreciation of $ 10,000)	30,000 per month

Jacobs pays all bills in the month incurred. All sales are on account with 50 percent collected the month of sale and the balance collected the following month. There are no sales discounts or bad debts. Jacobs desires to maintain an ending finished goods inventory equal to 20 percent of the following month's sales and a raw materials inventory equal to 10 percent of the following month's production. January 1, 2014, inventories are in line with these policies. Actual unit sales for December and budgeted unit sales for January, February, and March of 2014 are as follows:

JACOBS INCORPORATED Sales Budget For the Months of January, February, and March 2014
Month	December	January	February	March
Sales - Units	6,250	5,000	10,000	8,000
Sales - Dollars	$312,500	$250,000	$500,000	$400,000

Additional information:

• The January 1 beginning cash is projected as $5,000.
• For the purpose of operational budgeting, units in the January 1 inventory of finished goods are valued at variable manufacturing cost.
• Each unit of finished product requires one unit of raw materials.
• Jacobs intends to pay a cash dividend of $10,000 in January.

NOTE: For the entire problem - do not use any negative signs with your answers unless appropriate for net income(loss) or ending balance.

(a) A production budget for January and February.

Jacobs Incorporated Production Budget For the Months of January and February 2014
	January	February	March
Requirements for current sales	5,000	10,000	8,000
Desired ending inventory	2,000	1,600
Total requirements	7,000	11,600
Less beginning inventory	1,000	2,000
Production requirements	6,000	9,600

(b) A purchases budget in units for January.

Jacobs Incorporated Purchases Budget For the Month of January 2014
	January	February
Current requirements (units)	6,000	10,000
Desired ending inventory	960
Total requirements	6,960
Less beginning inventory	600
Purchases (units)	6,300
Purchases (dollars at $10 each)	63,600

(c) A manufacturing cost budget for January.

Jacobs Incorporated Manufacturing Cost Budget For the Month of January 2014
Variable costs
Direct materials	60,000
Direct labor	60,000
Variable manufacturing overhead	30,000
Total variable costs	150,000
Fixed manufacturing overhead	30,000
Total manufacturing overhead	180,000

(d) A cash budget for January.

Jacobs Incorporated Cash Budget For the Month of January 2014
Beginning balance		5,000
Receipts:
December sales	156,250
January sales	125,000	281,250
Total cash available		286,250
Disbursements:
Purchases	63,600
Direct labor	60,000
Variable manufacturing overhead	30,000
Fixed manufacturing overhead (exclude depreciation)	20,000
Variable selling and administrative	20,000
Fixed selling and administrative	15,000
Dividend	10,000	218,600
Ending Balance		67,650

(e) A budgeted contribution income statement for January.

Jacobs Incorporated Budgeted Contribution Income Statement For the Month of January 2014
Sales		Answer
Less variable costs:
Cost of goods sold	Answer
Selling and administrative	20,000	Answer
Contribution		Answer
Less fixed costs:
Manufacturing overhead	30,000
Selling and administrative	15,000	45,000
Net income		Answer