Less cash payments DM purchases 9 Direct labor 0 MOH costs Operating Expenses 82 1 Tax Payment 83 Equipment purchases 84 Total Disbursements 85 86 Ending cash balance before financing 87 Financing: Borrowings Repayments (enter as a neg. number) 90 88 89 Interest payments (enter as a neg. number) 91 Total financing 92 93 Cash balance, ending 94 j. Martin Manufacturing has a policy that the ending cash balance in each month must be at least $4,000. It has a line of credit with a local bank. The company can borrow in increments of $1,000 at the beginning of each month, up to a total outstanding loan balance of $150,000. The interest rate on these loans is 1% per month simple interest (not compounded). C The company would pay down on the line of credit balance in increments of $1,000 if it has excess funds at the end of the quarter. The company would also pay the accumulated interest at the end of the quarter on the funds borrowed during the quarter. k. The company's income tax rate is projected to be 30% of operating income S less interest expense. The company pays $10,000 cash at the end of February in estimated taxes. 8. Prepare combined cash budget, using the following format: a A Combined Cash Budget For the Quarter Ended March 31 Month February 2 January March Quarter Beginning cash balance 6 Plus: Cash collections Total cash available 7 8 Less cash payments Direct material purchases Direct labor Manufacturing overhead costs Operating expenses 10 11 12 13 Tax payment 14 Equipment purchases Total cash payments 15 16 Ending cash balance before financing 17 Financing: 18 Plus: New borrowings 19 Less: Debt repayments 20 Less: Interest payments 21 Ending cash balance 22 Comprehensive budgeting problem (Learning Objectives 2 &3) P9-57A Martin Manufacturing is preparing its master budget for the first quarter of the upcoming year. The following data pertain to Martin Manufacturing's operations: Current Assets as of December 31 (prior year) $ 4,500 Cash Accounts receivable, net $ 47,000 Inventory $15,700 Property, plant, and equipment, net $120,000 Accounts payable S 42,400 Capital stock $124,000 Retained earnings $ 23,100 4 SALES BUDGET April 271,000 10 Jan Feb 92,000 Quarter 7 Budgeted unit sales 8 Selling price per unit 9 Total Sales Mar 99,000 10 May 97000 80,000 85000 10 10 10 10 800,000 920,000 990,000 2,710,000 4,620,000 10 11 12 SCHEDULE OF EXPECTED CASH COLLECTIONS: 13 Dec 70000 Jan Feb Mar Quarter 24,000 49,000 27,600 56,000 14 Cash sales 0.3 81,300 29,700 64,400 15 Credit sales 169,400 250,700 0.7 16 Total Cash Collections 73,000 83,600 94,100 m T B F H PRODUCTION BUDGET Jan 8,000 2,300 10,300 2,000 8,300 Feb Mar Quarter Apr May 8500 9,700 Budgeted unit sales Add desired ending inventory Total needs Less beginning inventory S Units to produce 9,200 2,475 11,675 2,300 9,375 9,900 2,425 12,325 2,475 9,850 27,100 2,425 29,525 2,000 27,525 2,125 11,825 2,425 9,400 7 DIRECT MATERIALS BUDGET: Quarter Apr 9,400 28 Jan Feb 9,375 Mar 29 Units to be produced 30 Multiply by: Quantity of DM needed per uni 31 Quantity of DM needed for production 32 Plus: Desired ending inventory of DM 33 Total quantity of DM needed 34 Less beginning inventory of DM 35 Quantity of DM to purchase 36 Multiply by: Cost per pound $2 37 Total cost of DM purchases 9,850 27,525 2 8,300 2 2 2 2 18,800 18,750 1,970 19,700 1,880 21,580 1,970 19,610 39,220 39,220 S 55,050 16,600 1,875 18,800 73,850 31,400 42,450 84,900 110,540 D3 18,475 1,660 16,815 33,630 33,630 20,720 1,875 18,845 37,690 37,690 D3 CASH PAYMENTS FOR DM PURCHASES: Jan Feb Mar 7,844 Quarter April 57,782 6,726 2 Accounts payable 3 Januray purchases 2 of DM total 4 February purchases 5 March purchases 46 Total cash payments 42,400 7,538 6,726 26,904 26,904 30,152 37,996 30,152 121,564 31,376.0 49,126 34,442 47 48 49 CASH PAYMENTS FOR DIRECT LABOR: 50 Jan Feb Mar Quarter 51 Direct labor 996 1,125 1,182 3,303 52 53 54 55 CASH PAYMENTS FOR MANUFACTURING OVERHEAD Quarter 33,030 15,000 9,000 57,030 Jan Feb Mar 56 9,960 5,000 3,000 17,960 11,250 11,820 57 Variable manufacturing overhead costs 58 Rent (fixed) 59 Other MOH (fixed) 60 Total cash payments 5,000 3,000 19,250 5,000 3,000 19,820 71 FOR THE THREE MONTHS ENDING March 31 72 Jan 4,500 73,000 77,500 Feb 4,818 83,600 88,418 Mar 73 Cash balance, beginning 74 Add collections from customers 75 Total cash available 76 4,401 94,100 98,501 Quarter 4,500 250,700 255,200 77 Less cash payments DM purchases 79 Direct labor 78 80 MOH costs Operating Expenses 82 81 Tax Payment Equipment purchases 84 Total Disbursements 83 85 86 Ending cash balance before financing 87 Financing: Borrowings Repayments (enter as a neg. number) 90 88 89 Interest payments (enter as a neg. number) 91 Total financing 92 93 Cash balance, ending 6 BUDGETED MANUFACTURING COST PER UNIT 7 8 Direct materials cost per unit 21bs per unit, 99 Direct labor cost per unit ($12.01) 00 Variable manufacturing costs per unit 01 Fixed manufacturing overhead per unit 102 Cost of manufacturing each unit 4.00 0.12 1.20 0.80 6.12 103 104 105 Martin Manufacturing BUDGETED INCOME STATEMENT FOR THE THREE MONTHS ENDED March 31 106 107 271,000 108 Sales 109 Less COGS: 110 Gross profit 111 Less expenses: 112 Operating Expenses 113 Depreciation 114 Operating Income 115 116 Income tax expense 117 Net income 165,852 105,148 30,100 4,600 70,448 330 21,035 Interest Expense 49,083