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Sprinkler Corporation produces plastic garden sprinklers. The company is preparing its budget for 2022. The first step is to plan for the first quarter of that coming year. Sprinkler has collected the following information from the managers.

1.Sales:

Sales for November 2021112,500 units

Sales for December 2021102,100 units

Expected sales for January 2022113,000 units

Expected sales for February 2022112,500 units

Expected sales for March 2022116,000 units

Expected sales for April 2022125,000 units

Expected sales for May 2022137,500 units

Selling price per unit$12

Sprinkler likes to keep 10% of next month's unit sales in ending inventory. All sales are on credit. 85% of the accounts receivable are collected in the month of sale and 15% of the accounts receivable are collected in the month after sale. Accounts receivable on December 31, 2021, totaled $183,780.

2.Direct Materials:

2 pounds of direct materials is needed to produce one unit. Sprinkler likes to keep 5% of the materials needed for the next month's production in its ending inventory. Raw materials on hand on December 31, 2021, totaled 11,295 pounds.

Payment for materials is made within 15 days. 50% is paid in the month of purchase, and 50% is paid after the month of purchase. Accounts payable on December 31, 2021, totaled $120,595. Directmaterials cost is $1.04 per pound.

3.Direct Labor

Labor requires 12 minutes per unit for completion and is paid at a rate of $8 per hour.

4.Manufacturing Overhead

Indirect materials$0.30 per labor hour

Indirect labor$0.50 per labor hour

Utilities$0.45 per labor hour

Maintenance$0.25 per labor hour

Factory supervisor's salary$42,000 per month

Factory Depreciation$16,800 per month

Property taxes$ 2,675 per month

Insurance$ 1,200 per month

Repairs$ 1,300 per month

5.Selling and Administrative expenses

Salaries$72,000 per month

Advertising$15,000 per month

Insurance$ 1,400 per month

Office Depreciation$ 2,500 per month

Other fixed costs$ 3,000 per month

Other Information

The cash balance on December 31, 2021, totaled $100,500, but management has decided it would like to maintain a cash balance of at least $800,000 beginning on January 31, 2022.

Dividends are paid each month @ $2.50 per share for 5,000 shares. The company has an open line of credit with national Bank. The terms of the agreement require borrowing to be in the increments of $1,000, and the interest rate is 8%. Sprinkler borrows on the first day of the month and repays on the last day of the month if possible.

A $500,000 equipment purchase is planned for February 2022.

Required:

Do the following for the first quarter (January, February & March) of 2022 by using EXCEL spreadsheet:

(a)Prepare a Sales Budget

(b)Prepare a Production Budget

(c)Prepare a Direct Materials Purchase Budget

(d)Prepare Direct Labor Budget

(e)Prepare manufacturing Overhead Budget

(f)Prepare Selling and Administration Budget

(g)Prepare Schedule of expected cash collections from customers

(h)Prepare a schedule for expected cash payments for materials purchases

(i)Prepare a Cash Budge

??

Sprinkler coropration Cash Budget For the first quarter of 2022 First Quarter January February March Quarter Beginning cash balance 100,500 813,842.20 1,044,914.80 100,500 Add: Receipts Collections from customers 1,336,380 1,350,900 1,385,700 4,072,980 Total available cash 1,436,880 2,164,742.20 2,430,614.80 6,032,237 Less: Disbursements Direct materials 238,057.80 235,037.40 239,636.80 712,732 Direct labor 180,720 180,560 187,040 548,320 Manufacturing overhead 97,860 97,830 99,045 294,735 Selling and administrative 93,900 93,900 93,900 281,700 Equipment purchase 500,000 500,000 Dividends 12500 12500 12500 37,500 Total disbursements 623,037.80 1119827.4 632121.8 2,374,987 Excess (deficiency) of available cash over cash disbursements 813,842.20 1,044,914.80 1,798,493.00 3,657,250 Financing: Borrowings Repayments Interest Ending cash balance 813.842.20 1.044.914.80 1.798.493 3.657.250Sprinkler coropration Selling and Administrative Expense Budget For the first quarter of 2022 First Quarter January February March Quarter Budget sales in units (from part a) 113000 112500 116000 341500 Variable expenses per unit 1 1 1 1 Total variable S & A expense 113000 112500 116000 341500 Fixed expenses: Advertising 15000 15000 15000 45000 Insurance 1400 1400 1400 4200 Salaries 72000 72000 72000 216000 Depreciation 2500 2500 2500 7500 Other 3000 3000 3000 9000 Total fixed expenses 93900 93900 93900 281700 Total S & A expenses 206900 206400 209900 623200