Klean Steppers A group of students at the University of Technologs, Jamaica recently won an award in the annual UTech, Ia Business Model Competition for their invention, a white dirt-proof sneaker for children in kindergarten. This invention arose from complaints from parents about having to buy white sneakers for their child children for physical education that soil easily. As a result of the invention, the students decided to start a business, "Klean Steppers' to start production The sneakers have an innovative design and we made of a robust leather and cushioning material, which heightens the resistance to dirt and dest. The following information was discussed at a meeting with the Klean Steppers team. Sales and collections The sneakers are designed for girls and boys. Details of selling prices and projected sales in pairs of sneakers for the four-month period are shown below. Type Selling price Months July August September October Girls $2.500 290 190 Boys $.2900 195 280 160 320 230 It is expected that all sales will be on credit to department stores in Jamaica. It is estimated that 30% of customers will pay within one month while the remaining customers will pay the month following sale Production Production of sneakers will be based on sales demand. The company requires a closing inventory of 20% of the next month's budgeted sales in pairs of sneakers for pirls and boys. There is no opening stock of inventory Direct Materials and Direct labour (1) The eakers are made with special leather and specially treated rubber for the sole. The materials and labour required to make each pair of secakers are as follows: Type of soekers Leather Cushion Labour $170 per meter $920 perc $340 per hour Girls Sm 15 minutes Boys 0.10 12 minutes 0. The company requires closing wentary of 10% of ww maria required for the follow this material needed. There was opening stock of www material. The company plans to leave the of 6 and 13 of cushioning nesthe 30 Set Materials are purchased from a company hused in the Cayman Island. This supplier requires that some of the purchase total is paid for in cash with the order and allows one month's credit for the remaining amount (b) In keeping with government requirements, biodegradable cardboard boxes will be used to package the sneakers. Each box will cost $28.50 per box. The company will buy the packaging materials from a Jamaican company for cash cach month. to) To make girls' sneakers, each unit requires 15 minutes of direct labour hours and to make boys' meakers each unit requires 12 minutes of direct labour hours. The company pays 5340 per hour for each direct labour hour. Labour costs are paid in the month incurred, Manufacturing Overheads (d) The following manufacturing overheads are budgeted for the quarter August $11.200 September SI 2.200 Indirect material Indirect labour July S10.200 $4,800 $3.100 S1,800 54.120 $2.400 $1,800 54.280 $2.700 Other overhead Depreciation S1.800 In addition to the above overheads the following costs will be incurred te) The company has signed a rental agreement for the production facility. The annual rental charge will be $360,000, which will be paid in equal moothly instalments. A security deposit amounting to $25,000 must also be paid in July on Other operating costs including power, insurance, and administration expenses, which must be paid monthly, are expected to be 93.600 for the year Selling and administrative costs Marketing Campaign The company will launch an advertising campaigning social media television, radio, and wwwpaper. This will cost $33.00 for three-month period payable in equal installments from July Sales.com A competed is dollars will be puble for the month incro hereditatem ther selling and administrative expenses use the following cost function per quarter yu$24,000 + 632, where represents budgeted sales in units. Other information 2) The prize money of 500,000 will be introduced at the commencement of the company's operations and should be treated as a cash inflow (capital investment by owners). Beginning cach balance is mil ) The closing inventory as at 30 of September is $28.200 fi, www material closing inventory 55.154 and finished goods inventory is $23,046). Kloun Stepper is seeking 51,000,000 loan from Development Bank of Jamaica to purchase a new equipment costing $216,000 and assist with the operating expenses for its first year of operation, Interest rate on the loan is 12%. The principal and interest will be repaid in 4 installments at the end of each quarter Requirements Prepare Klean Steppers master budget for month and in total for the quarter by completing the following schedules and statements 1 Sales budget (12 marks) 11 Schedule of cash collected from customers marks) TIL Production budget (28 marks) Direct-material budget (4 marks) V Schedule of cash disbursement to suppliers for direct material (12 marks) VI Direct labour budget (16 marks) VII Manufacture overhead budget (13 marks) VIIL Selling and ministrative budget (1 mark) Cashbu 01 mark) EX Cost of Goods Starters) XI Hosted by XI (12