Kimmel Company Limited Budgeting Project Bryan Rubio, Chief Executive Officer of Kimmel Company Limited, the principal supplier of the finest wooden dining tables with glass tops in Spotiland. Bryan has just concluded a meeting with the budget committee in September 2023 where the preparation of the company's master budget for 2024 was discussed extensively. Arising out of the meeting, it was decided that a new industrial sander and polisher equipment would be purchased on 1st January 2024. It is expected to take most of the year to train the personnel and reorganize the production process to take full advantage of the new equipment. In response to the issue about financing the acquisition of new equipment, Marie stated that the sander and polisher equipment will cost $1,000,000 with an additional cost of $200,000 for ancillary equipment. The total acquisition will be financed with a one-year loan from Aridosti Bank on 1st January 2024. The interest rate will be 2 percent per quarter on a compound basis with one payment of principal and interest payments to be made on 31st December 2024. Kimmel Company Limited is a manufacturer of wooden tables with glass tops, large and small. The firm's two products are designated as L (large table; 60 x 24 inches) and S (small table; 36 x 18 inches). The primary raw materials are lumber and glass sheets 60x30 inches. Large table requires thirteen square feet of lumber while S small wooden table requires nine square feet of lumber. Allowing for normal breakage and scrap glass, the company can get either 2 Small table tops or one Large table top out of a glass sheet. Other raw materials, such as cardboard backing, are insignificant in cost and are treated as indirect materials. Manuela Lima, Chief Finance Officer of Kimmel Company Limited is in charge of preparing the master budget for 2024. she has gathered the following information: 1. Sales, principal budget factor, in the fourth quarter 2023 are expected to be 10,000 Large tables and 15,000 Small tables. Based on improved economic outlook, the sales manager predicts that for the next two years 2024 and 2025, sales for Small tables will grow by 1,500 units each quarter over the previous quarter while Large tables will grow by 1,000 each quarter over the previous quarter. 2. Kimmel Company Limited sales history indicates that 60 percent of all sales are on credit, with the remainder of the sales in cash. The company's collection experience shows that 60 percent of the credit sales are collected during the quarter in which the sale is made, the remainder is collected in the following quarter. 3. Currently, the Large table sells for $750 each, and the Small table sells for $450 each. It is expected that prices will hold firm throughout 2024. 4. The production manager attempts to end each quarter with enough finished-goods inventory in each product line to cover 20 percent of the following quarter's sales. Moreover, an attempt is made to end each quarter with 25 percent of the glass sheets needed for the following quarter's production. Assume an ending inventory of 5,000 glass sheets for the fourth quarter of 2023. Lumber is purchased locally, the company buys them on a just-in-time basis; inventory is negligible. 5. All direct-material purchases are made on account, and 80 percent of each quarter's purchases are paid in cash during the same quarter as the purchase. The remainder is paid in the next quarter. 6. Indirect materials are purchased with cash as needed. Work-in-process is insignificant. 7. Projected variable manufacturing costs for 2024 are as follows: Large table Small table Direct material Lumber: Large: 13sq. ft. @ $20 per sq. foot$260 Small: 9sq.ft. @ $20 per sq. foot$180 Glass sheets: Large: 1sheet @ $50 per sheet 50 Small: sheet @ $50 per sheet 25 Direct labour: Large: 5 hours @ $30 per hour 150 Small: 3 hours @ $30 per hour 90 Manufacture overhead 0.5 direct-labour hour x $20 per hour 10____ __ 10___ Total product cost per unit $470 $305___ 8. The following production overheads are budgeted for 2024. 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Indirect material 102,000 112,000 122,000 132,000 Indirect labour 408,000 448,000 488,000 528,000 Other overhead 310,000 360,000 410,000 460,000 Depreciation 250,000 250,000 250,000 250,000 Total overhead costs $1,070,000 $1,170,000 $1,270,000 $1,370,000 9. Selling and administrative expenses are expected to be 5% of sales value. 10. Bryan anticipates for each quarter dividend of $350,000 will be declared and paid in cash. Required: Prepare Kimmel Company Limited master budget for each quarter of 2024 and in total for the year by completing the following schedules and statements: (a) Sales budget (prepare 4th quarter of 2023 as well). (8 marks) (b) Schedule of cash collected from customers. (10 marks) (c) Production budget (prepare 4th quarter of 2023 as well). (19 marks) (d) Direct-material budget (prepare 4th quarter of 2023 as well). (19marks) (e) Schedule of cash disbursement to suppliers for direct material. (9 marks) (f) Direct labour budget. (4 marks) (g) Production overhead budget. (5 marks) (h) Cash budget