Learning Objective 3 3rd Qtr. OH $255.00 eparing an operating budget-direct materials, direct labor, and manufacturing overhead budgets Grady, Inc. manufactures model airplane kits and projects production at 650, 500, 000 kits for the next four quarters. Direct materials are 4 ounces of plastic per kit and the plastic costs $1 per Ounce. Indirect materials are considered insignifi- cant and are not included in the budgeting process. Beginning Raw Materials Inven- tory is 850 ounces, and the company desires to end each quarter with 10% of the materials needed for the next quarter's production. Grady desires a balance of 200 ounces in Raw Materials Inventory at the end of the fourth quarter. Each kit requires 0.10 hours of direct labor at an average cost of $10 per hour. Manufacturing over head is allocated using direct labor hours as the allocation base. Variable overhead is $0.20 per kit, and fixed overhead is $165 per quarter. Prepare Grady's direct materials budget, direct labor budget, and manufacturing overhead budget for the year. Round the direct labor hours needed for production, budgeted overhead costs, and prede- termined overhead allocation rate to two decimal places. Round other amounts to the nearest whole number. Learning Objective 3 NOW! Exercise E22-24 must be completed before attempting Exercise E22-25. E22-25 Preparing an operating budget-cost of goods sold budget Refer to the budgets prepared in Exercise E22-24. Determine the cost per kit to manufacture the model airplane kits. Grady projects sales of 100, 150, 100, and 200 kits for the next four quarters. Prepare a cost of goods sold budget for the year. Grady has no kits in beginning inventory. Round amounts to two decimal places. 3rd Qtr. COGS 5550 Learning Objectives 4,7 1. Feb. total cash receipts $12,080 E22-26 Preparing a financial budget-schedule of cash receipts, sensitivity analysis Marcel Company projects the following sales for the first three months of the year: $11,200 in January; $12,300 in February; and $11,100 in March. The com- pany expects 60% of the sales to be cash and the remainder on account. Sales on account are collected 50% in the month of the sale and 50% in the following month. The Accounts Receivable account has a zero balance on January 1. Round to the nearest dollar. Requirements 1. Prepare a schedule of cash receipts for Marcel for January, February, and March. What is the balance in Accounts Receivable on March 312 2. Prepare a revised schedule of cash receipts if receipts from sales on account are 60% in the month of the sale, 30% in the month following the sale, and 10% in the second month following the sale. What is the balance in Accounts Receivable on March 31? Learning Objective 4 E22-27 Preparing a financial budget-schedule of cash Marcel Company has the following projected costs for manufacturing and selling and administrative expenses: Mar. total cash pmts. $11,500 January $3,100 3,300 550 650 February $3,500 3,500 March $ 4,800 3,600 550 650 550 650 Direct materials purchases Direct labor costs Depreciation on plant Utilities for plant Property taxes on plant Depreciation on office Utilities for office Property taxes on office Office salaries 200 250 170 3,500 550 250 170 3,500 550 250 170 3,500 All costs are paid in month incurred except: direct materials, which are paid in the month following the purchase; utilities, which are paid in the month after incurred; and property taxes, which are prepaid for the year on January 2. The Accounts Payable and Utilities Payable accounts have a zero balance on January 1. Prepare a schedule of cash payments for Marcel for January, February, and March. Determine the balances in Prepaid Property Taxes, Accounts Payable, and Utilities Payable as of March 31. Learning Objective 4 Feb. ending cash bal. $5,780 E22-28 Preparing the financial budget-cash budget Use the original schedule of cash receipts completed in Exercise E22-26, Requirement 1, and the schedule of cash payments completed in Exercise E22-27 to complete a cash budget for Marcel Company for January, February, and March. Additional information: Marcel's beginning cash balance is $5,000, and Marcel desires to maintain a minimum ending cash balance of $5,000. Marcel borrows cash as needed at the beginning of each month in increments of $1,000 and repays the amounts borrowed in increments of $1,000 at the beginning of months when excess cash is available. The interest rate on amounts borrowed is 8% per year. Interest is paid at the beginning of the month on the outstanding balance from the previous month