Insight Glass Company

Insight Glass makes sliding glass doors for two local construction companies and wants to prepare a master budget for the next month of operation, June 2014. The sales department estimates that it can sell 180 doors in June. Each door retails for $1,100. In order to avoid delays in shipping, management wants to maintain ending inventory each month equal to 10% of the estimated unit sales in that month. Beginning inventory of finished doors is expected to be 20 units as of June 1, 2014 with a per unit cost of $624. Note: The per unit cost of doors produced during Junemay vary slightly from the per unit cost of Junes beginning Finished Goods Inventory (given as $624). In other words, you will need to arrive at a new per unit cost for the month of June.

Each door takes 36 square feet of glass and 4 hours of direct labor. Glass purchases are estimated at $10 per square foot and direct labor averages $16 an hour, including benefits. As of June 1^st, Insight Glass estimates it will have 1500 square feet of glass in raw materials inventory and would like to have ending inventory of 1000 feet. Variable overhead costs are estimated at $100 per door. Fixed overhead for the month is estimated to be $17,010.

Insight Glass anticipates selling and administrative costs of $18,750 monthly and the monthly interest cost on its long-term debt is 1% of the outstanding balance, paid on the 30^thof each month. The principal payment on the debt is $25,000 per month. Insight Glass, as a corporation, expects to pay 40% of its net income in income taxes. Monthly estimates are sent to the appropriate taxing authority by the 10^thof the next month (therefore, income taxes payable as of 5/31/14 will be paid on 6/10).

Monthly depreciation of the building and the equipment is $8,000 and $10,000 respectively (this is the sales/administrative portion of depreciation and not a part of overhead production costs).

All sales are on account. However, in estimating cash flows, Insight Glass expects 60% of the current month sales to be received by the end of the month and the balance to be collected in the next month. Therefore, all the Accounts Receivable owing at June 1^st(which represents 40% of May sales) is expected to be received in June.

Glass is purchased on account. Exactly 70% of the purchases are paid in the current month and the balance is paid early in the next month. The balance of Accounts Payable owing at June 1^st, will be paid in June. Assume all other expenses (both production and administrative) are paid in the month incurred.

The Board of Directors for the company plans to declare and pay a $.50 per share cash dividend during the month of June.

Required:

1. Sales budget for June
2. Production budget for June in units.
3. Direct Materials budget for June.
4. Direct Labor budget for June.
5. Manufacturing Overhead budget for June.
6. Cost of Goods Sold budget for June.
7. Cash Receipts & Cash Disbursements budget for June
8. Cash Budget for June
9. Pro-forma financial statements for June
   1. Multi-step Income Statement
      1. Link the CGS to the production budget (average cost per unit).
      2. Reconcile retained earnings at the bottom of income statement.
   2. Classified Balance Sheet
10. Management is unsure of the projected sales figure and would like to know how many units need to be sold for the company to break-even.

Data Table Part 1 Company Name Budgeted Sales, in units Expected Sales price Beginning Inv. FG (in units): Ending Inv. of FG desired (in units): "Desired El in Units is 10% of current's month sales Insight Glass Company Sales Budget For the Month Ending June 30, 2014 Insight Glass Company Budgeted Sales, Door Units Sales Price per Unit Total Sales =1096" Beg Inv, Direct Material (glass) in sq ft Ending Inv, Glass in sq ft Square feet of glass required per unit Cost Per sq ft glass Direct Material (glass) Cost per unit Insight Glass Company Production Budget For the Month Ending June 30, 2014 Budgeted Sales, Doors Add Desired Ending Inventory Total Units Needed Less Beginning Inventory Budgeted Doors to Produce in June Direct Labor Hours per unit Diect Labor Cost per Hour Variable OH per Unit Fixed OH Insight Glass Company Direct Materials Budget For the Month Ending June 30, 2014 Insight Glass Company Direct Labor Budget For the Month Ending June 30, 2014 Budgeted Units to Produce Direct Material Cost per Unit Direct Materials Needed for Production Add Value of Desired Direct Materials in Ending Inv Total Direct Materials Needed Less: Value of Direct Materials in Beginning Inv Budgeted Purchases of Direct Materials Budgeted Units to Produce Direct Labor Hours per Unit Direct Labor Hours needed Direct Labor Cost per Hour Budgeted Direct Labor Cost Insight Glass Company Cash Budget For the Month Ending June 30, 2014 Data Table Part 2 Annual Interest Rate on Debt Debt from Balance Sheet Monthly interest on debt (-1%) Beginning Cash Balance Cash Receipts Income tax rate General Selling & Admin A/R balance on May 31, 2014 June Sales, 60% collected in same month Depreciation - Building Depreciation - Equipment Cash Available Income Tax Payable from Balance Sheet Debt Principal Repayment by Month Cash Payments Accounts Payable fr. May 31 to be paid off June Purchases, 70% paid in same month Direct Labor MOH- Variable MOH Fixed Selling & Admin Income Taxes Interest Expense A/R Collections % in month of sale payment % in month of purchase Dividends per share Number of shares outstandin Ending Cash before Financing Cash Reciepts from Customers Financing Total Sales Forecast for June Principal Repayments Dividends declared and paid Cash Receipts A/R balance on May 31, 2014 June Sales, 60% collected in same month Ending Cash Balance Cash Disbursements Total Direct Materials purchases Cash Payments Accounts Payable fr. May 31 to be paid off June Purchases, 70% paid in same month Direct Labor MOH - Variable MOH Fixed Selling & Admin Income Taxes to be paid (from May) Interest Expense Principal Repayments Dividends Pai