iness Decision Case The sales department of Donovan Manufacturing, Inc. has completed the llowing sales forecast for the months of January through March 2016 for its only two products: 50.000 units of J to be sold at $90 each and 30,000 units of K to be sold at $70 each. The desired unit inventories 60,000 units of J and 30,000 units of K. The January 1, 2016, unit inventories were 5,000 units of J and 2,000 units of K. at March 31, 2016, are 10% of the next quarter's unit sales forecast, which are Each unit of J requires 3 pounds of material A and 2 pounds of material B for its manufacture: K requires 2 pounds of A and 4 pounds of B. The purchase cost of A is $9 per pound and the purchase cost of B is $5 per pound. Materials A and B on hand at January 1, 2016, were 19,000 pounds of A and 7,000 pounds of B. Desired inventories at March 31, 2016, are 14,000 pounds of A and 8,000 pounds of B. Each unit of J requires 0.5 of direct labor. The average hourly rate for hour of direct labor in the factory; each unit of K requires 1.0 hour direct labor is $12 per hour. Estimated manufacturing overhead cost is $6 per direct labor hour plus $90,000 per month. Selling and administrative are estimated to be 10% of sales revenue plus $180,000 per month. expenses Cash sales for the first quarter are estimated to be $300,000 per month. It is forecast that 30% of the credit sales for the quarter ended March 31, 2016, will occur in January, 30% in Februa and 40% in March of credit sales (December through March), 40% will be collected as cash in the month of sale and 55% will be collected in the following month. The remainder will be uncollectible Cash collected in January 2016 from December 2015 sales will be $1,050,000. ry The January 1, 2016, cash balance was $70,000. The minimum acceptable cash balanceat the end of each month is $60,000. Short-term borrowings (6-month term) are made in multiples of $10,000. Interest is charged at the rate of 1 % per month on short-term borrowings. The first interest payment is made the month following the borrowing. Cash disbursements (excluding interest on short-term borrowings) are estimated as follows: January February March Selling and administrative expenses . 390,000 . . 90,000 410,000 90,000 400,000 90,000 0 210,000 124,000 110,000 50,000 0 Required a. Prepare the sales budget for the quarter ended March 31, 2016. b. Prepare the production budget for the quarter ended March 31, 2016. c. Prepare the direct material budget for the quarter ended March 31, 2016 d. Prepare the direct labor budget for the quarter ended March 31, 2016. f. Prepare the selling and administrative expense budget for the quarter ended March3 8. Prepare a schedule of cash collected from customers for the quarter ended March 31, h. Prepare the cash budget for the quarter ended March 31, 2016