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L . C . Body Boards Inc. Budgeting Project As the head accountant for L . C . Body Boards Inc., you are responsible for

L. C. Body Boards Inc. Budgeting Project
As the head accountant for L. C. Body Boards Inc., you are responsible for preparing the companys master budget for the first quarter of 20XX. The administrative and divisional managers have prepared the appropriate information (found below) for you to prepare the budget. In addition to the compiled information, you will also find the budgets, reports, questions, and statements required by the CFO.
Step 1
L. C. Body Boards Inc. produces Body Boards for sale at local surf shops.
The company is in the process of creating a master budget for the first quarter of 20XX.
Sales results from the prior year are:
Last Year Units Sold
January 190,000
February 210,000
March 215,000
April 199,000
May 194,000
Unit Sales are to expected increase 14% above last years sales and each unit sells for $53.00.
All sales are on credit. The company expects to collect
70% of sales in the month of sale,
28% of sales in the month following the sale,
2% percent will be uncollectable (Bad Debt Debts Expense is recognized in the month of sale).
The company gives credit terms of 2/ EOM, n/EOM second month. Accounts receivable at the end of last year totaled $ 485,000. This represents the collectable amount of December sales that will be collected in January.
Management prefers to maintain ending finished goods inventory equal to 12% of next month's sales. The Finished Goods Inventory on December 31 of the prior year was 32,500 units.
REQUIRED:
a) Prepare a sales and cash collections budget for L. C. Body Boards Inc. (For all budgets show amounts for January, February, March, and the total for quarter, also all budgets need to be to two decimal places)
b) Prepare a production budget for L. C. Body Boards Inc.
L. C. Body Boards Inc. Budgeting Project
Step 2
L. C. Body Boards Inc. is now preparing the budget for direct materials purchases, direct labor, and manufacturing overhead.
Each unit production requires 6 pounds Foam X .5-pound Plastic Z.
L.C. Body Boards pays $3.75 per pound $10 per pound.
Management prefers to maintain ending raw materials inventory equal to materials 30% of needed production for the next month. Raw Material inventory on December 31 for Foam X was 385,000 pounds and for Plastic Z was 32,000 pounds.
All direct materials are purchased on credit. L. C. Body Boards pays 72% of purchases in the month of purchase and 28% the following month. L. C. Body Boards pays all invoices in a timely manner which have credit terms of 1/15 net 30. The accounts payable on December 31 were $1,650,000.
Each unit of production requires 0.6 direct labor hours at a cost of $21.00 per hour.
Variable overhead costs are:
Indirect materials $ 0.27 per unit
Indirect Labor $ 1.20 per unit
Other $ 1.12 per unit
Fixed overhead costs per month:
Salaries $196,000
Rent $18,000
Depreciation $24,000
REQUIRED:
a) Prepare two direct materials budgets, one for the Foam X and the other for the Plastic Z for L. C. Body Boards
b) Prepare a single cash disbursements budget for the material purchases for L. C. Body Boards.
c) Prepare a schedule showing the cost of ending inventory for raw materials as of March 31,20xx
d) Prepare a direct labor budget for L. C. Body Boards Inc. Show the cash disbursements for labor at the bottom of the budget.
e) Prepare a manufacturing overhead budget for L. C. Body Boards Inc. Show cash disbursements for overhead at the bottom of the budget. Show a calculation of the per unit cost of the manufacturing overhead ROUNDED to 3 decimal places. (Note you must use the excel round function for this calculation)
f) Prepare a schedule for the cost of Finished Goods Inventory as of March 31,20xx.
L. C. Body Boards Inc. Budgeting Project
Step 3
L. C. Body Boards Inc. expects the following as pertaining to the capital expenditures and cash budgets.
L. C. Body Boards Inc. expects the following monthly Selling and Administrative Expenses
Salaries $16,000 Per Unit
Rent $19,000
Advertising $85,000
Depreciation $22,000
Other $11,500
Sales Commissions $1.40
Capital Expenditures
The company plans to purchase selling and administrative equipment totaling $150,000 in March 20XX.
The company plans to purchase Production equipment totaling $2,600,000 in March 20XX.
Both will be purchased at the end of March from operating cash flow and will not affect depreciation expenses for the first quarter.
Cash Budget
The company has a credit line of $3,000,000 for operations with an interest rate of 12% APR. Interest payments for the month are based on the beginning balance of the line of credit. At the end of every month, the cash balance should be a minimum of $ 50,000.
The cash budget should include an estimate of amounts to be borrowed or returned to t

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