Lex, Corp., manufactures bamboo coat racks that sell for $25 each. Each rack requires 4 linear feet of bamboo, which costs $2.00 per foot. Each rack takes approximately 30 minutes to build, and the labor rate averages $14 per hour. Lex has the following inventory policies: Ending finished goods inventory should be 40 percent of next month's sales. Ending direct materials inventory should be 30 percent of next month's production. . Expected unit sales (racks) for the upcoming months follow: March 330 April 360 May 410 June 510 485 July August 535 Variable manufacturing overhead is incurred at a rate of $0.40 per unit produced. Annual fixed manufacturing overhead is estimated to be $8,400 ($700 per month) for expected production of 4,000 units for the year. Selling and administrative expenses are estimated at $750 per month plus $0.50 per unit sold. Lex, Corp., had $13,500 cash on hand on April 1. Of its sales, 80 percent is in cash. Of the credit sales, 50 percent is collected during the month of the sale, and 50 percent is collected during the month following the sale. Assume the company can borrow in increments of $1,000 to maintain a $13,000 minimum cash balance and that the amount will be repaid in the subsequent month, provided there is adequate cash flow. Borrowings are made at the beginning of the month and repayments occur at the end of the month. Interest on borrowings is 12% annually and is paid monthly on amounts outstanding. Of direct materials purchases, 80 percent is paid for during the month purchased and 20 percent is paid in the following month. Direct material purchases for March 1 totaled $2,800. All other operating costs are paid during the month incurred. Monthly fixed manufacturing overhead includes $260 in depreciation. During May, Lex plans to pay $4,500 for a piece of equipment. 8.00 7.00 Budgeted Manufacturing cost per unit Direct materials Direct Labor Variable Manufacturing overhead Fixed Manufacturing overhead Total Manufacturing cost per unit Cost of Good Solds Budget Budgeted Sales (Units) $$$ $ $ $ $ $ 0.40 2.10 17.50 April May June 410 2nd Quarter 510 1,280 360 Budgeted manufacturing cost per unit Budgeted Cost of Goods sold $ $ 17.50 $ 6,300.00 $ 17.50 $ 7,175.00 $ 17.50 $ 17.50 8,925.00 $ 22,400.00 June 410 0.50 $ Selling and Administrative Budget April Budgeted sales (Units) Variable Selling and administrative rate $ Variable Selling and administrative expenses $ Fixed Selling and administrative expenses $ Budgeted Selling and administrative expenses $ May 360 0.50 $ 180.00 $ 750.00 $ 930.00 $ 2nd Quarter 510 1,280 0.50 $ 0.50 255.00 $ 640.00 750.00 $ 2,250.00 1,005.00 $ 2,890.00 205.00 $ 750.00 $ 955.00 $ May June 2nd Quarter Lex Corporation April Budgeted Income Statement For the Quarter Ending June Budgeted Sales Revenue $ Budgeted Cost of Goods Sold $ Budgeted Gross Margin $ Budgeted Selling and Administrative Expenses $ Budgeted Net Operating Income $ 9,000 $ 6,300 $ 2,700$ 930 $ 1,770 $ 10,250 $ 7,175 $ 3,075 $ 955 $ 2,120 $ 12,750 $ 8,925 $ 3,825$ 1,005 $ 2,820 $ 32,000 22,400 9,600 2,890 6,710 Cash Collection Budget 2nd Quarter Total April May June Budgeted sales revenue Cash collections Credit collections Cash collected from current month sales Cash collected from prior month sales Budgeted cash receipts Cash Disbursement Budget Total 2nd Quarter April May June Budgeted direct materials purchases Cash disbursements: Direct materials purchases Current month purchases Prior month purchases Direct labor Manufacturing overhead Less: Depreciation (given) Selling and administrative expenses Purchase of equipment Total budgeted cash payments Cash Budget 2nd Quarter Total April May June Beginning Cash Balance Plus: Budgeted Cash Receipts Less: Budgeted Cash Payments Preliminary Cash Balance Cash Borrowed / Repaid (with interest) Ending Cash Balance