Make sure to complete the quarterly totals in addition to the monthly values.

Sales budget

Cash collections

Production budget

Direct materials budget

Cash payments for direct materials

Cash budget Assumptions Sales Budget

Selling price is $15 per unit

Sales by month:

o April 25,000 units

o May 50,000 units

o June 40,000 units

o July 30,000 units

o August 20,000 units

Cash Collections

60% collected in month of sale

40% collected in the month after sale

Accounts receivable at the end of March is $25,000 and it will be collected in April Production Budget

Ending inventory is 25% of next months budgeted sales On March 31st there were 5,000 units on hand Direct Materials Budget

5 pounds of material are required for each unit of product

Ending inventory is 10% of the following month's production

On March 31st there was 10,000 pounds of material on hand

The cost of material is $0.50 per pound Cash Disbursements

60% will be paid in the month of purchase

40% will be paid in the following month

There was a balance in accounts payable on March 31st of $10,000 that will be paid in April Cash Budget

The April 1 cash balance is $50,000 The company maintains a minimum cash balance of $70,000

For April, May, and June there will be the following expenses:

o Direct labor - $20,000, $22,000 and $24,000

o Manufacturing overhead - $50,000, $75,000, and $60,000

o Selling and administrative expenses - $60,125, $70,000, and $75,000

A divided of $50,000 will be paid in April $300,000 in equipment purchases will be paid in May and $350,000 in June

$2,000 of interest will be paid in May to repay a loan

Step 1 - Prepare the Sales Budget Total 20 April May June | Expected unit sales Unit selling price Total sales Step 2 - Prepare a Schedule of Expected Cash Collections Total 20 June April $25,000 Accounts receivable from March 31st April sales: $15*25,000*60/100 May sales: June sales: Total cash collections Step 3 - Prepare the Production Budget April May June Total 20 July Expected unit sales Add: Desired ending finished goods units Total required units Less: Beginning finished goods units Required production units Step 4 - Prepare the Direct Materials Budget April May June Total 20 Units to be produced Direct materials per unit Total pounds needed for production Add: Desired ending direct materials (pounds) Total materials required Less: Beginning direct materials (pounds) Direct materials purchases Cost per pound Total cost of direct materials purchases Step 5 - Prepare a Schedule of Expected Cash Payments for Direct Materials Total 20 April May June Accounts payable from March 31st April purchases: May purchases: June purchases: Total cash disbursements Step 6 - Prepare the Cash Budget Total April May June 20 Beginning cash balance Add: Receipts Collections from customers Total available cash Less: Disbursements Direct materials Direct labor Manufacturing overhead Selling and administrative expenses Other Other Total disbursements Excess (deficiency) of available cash over cash disbursements Financing: Add: Borrowings Less: Repayments including interest Ending cash balance