- Managerial Accounting Blue Aggies' Reproductions makes reproductions of antique tables and chairs and sells them through three sales outlets. The product line consists of two styles of chairs, two styles of tables, and three styles of cabinets. Although customers often ask Blue Martin, the owner/manager of Blue Aggies' Reproductions, to make other products, he does not intend to expand the product line. The planning group at Blue Aggies' Reproductions prepares a master budget for each fiscal year, which corresponds to the calendar year. It is December 2019, and the planners are completing the master budget for 2020. Unit prices are $300, $800, and $1,900 for the chairs, tables, and cabinets, respectively. Customers pay (1) by cash and receive a 5% discount, (2) by credit card (the credit card company takes 4% of the revenue as its fee and remits the balance in the month following the month of sale), or (3) on account (only exporters buy on account). The distribution of cash, credit card, and exporter sales is 25%, 35%, and 40%, respectively. Of the credit sales to exporters, Blue Aggies Reproductions collects 30% in the month following the sale, 50% in the second month following the sale, and 17% in the third month following the sale, with 3% going uncollected. Blue Aggies' Reproductions recognizes the expense of cash discounts, credit card fees, and bad debts in the month of the sale. Blue Aggies' employs 40 people who work in the following areas: 15 in administration, sales, and shipping; 2 in manufacturing supervision (director and a scheduler); 9 in manufacturing fabrication and assembly (carpenters); and 14 in manufacturing, finishing, and other areas (helpers, cleaners, and maintenance crew). The carpenter hours required to make the parts for and assemble a chair, table, or cabinet are 0.4, 2.5, and 6, respectively. Production personnel have organized the work so that each carpenter hour worked requires 1.5 helper hours. Therefore, production planners maintain a ratio on average of 1.5 helpers for every carpenter. The company pays carpenters and helpers $25 and $15 per hour, respectively (including all benefits). Blue Aggies' Reproductions guarantees all employees pay for at least 175 hours per month regardless of the hours of work available. When the employees are not doing their regular jobs, they undertake maintenance, training, community service, and customer relations activities. Blue Aggies' pays each employee weekly for that week's work. If an employee works 175 hours or less during the month, Blue Aggies' still pays the employee for 175 hours at his or her normal hourly rate. The company pays 150% of the normal hourly rate for every hour over 175 that the employee works during the month. Planners add new carpenters if the projected total monthly overtime is more than 5% of the total regular carpenter hours available. Blue Aggies' has a policy of no employee layoffs. Any required hiring is done on the first day of each month. For a factory, Blue Aggies' Reproductions rents a converted warehouse that costs $600,000 per year. The company pays rent quarterly beginning January 1 of each year. Blue Aggies' pays other fixed manufacturing costs, which include manufacturing supervision salaries and amount to $480,000 annually, paid in equal monthly amounts. The capital investment policy is to purchase, each January and July, $5,000 of machinery and equipment per carpenter employed during that month. Blue Argies' recognizes depreciation at the rate of 10% of the year-end balance of the machinery and equipment account. Statistical studies of cost behavior have determined that supplies, variable support, and maintenance costs vary with the number of carpenter hours worked and are $5, $20, and $15 per hour, respectively. The units of wood required for chairs, tables, and cabinets are 1.8 and 15, respectively. Each unit of wood costs $30. The inventory policy is to make and store 10% of next month's products in the month before they will be sold. Two suppliers deliver raw materials and supplies as required. The company pays for all materials, supplies, variable support, and maintenance items on receipt. Annual administration salaries, fixed selling costs, and planned advertising expenditures are $300,000, $360,000, and $600,000, respectively. Blue Aggies' Reproductions makes these expenditures in equal monthly amounts. Packaging and shipping costs for chairs, tables, and cabinets are $15, $65, and $135, respectively. Variable selling costs are 6% of each product's list price. Blue Aggies' Reproductions pays packaging, shipping, and variable selling costs as incurred. Using its line of credit, Blue Aggies' Reproductions maintains a minimum cash balance of $50,000. All line-of-credit transactions occur on the first day of each month. The bank charges interest on the line of credit account balance at the rate of 12% per year. Blue Aggies' pays Interest on the first day of each month on the line-of-credit balance outstanding at the end of the previous month. On the first of each month, the bank pays interest at the rate of 4% per year on funds exceeding $50,000 in the company's cash account at the end of the previous month. Realized sales for October and November and expected sales for December 2019 appear in the following table: Blue Argies' REPRODUCTIONS UNIT SALES 2019 ITEMS: October November December Chairs 1,000 1075 975 Tables 195 210 Cabinets 122 105 198 Cabinets 110 120 April Sales staff estimates the unit demand for 2020 as follows: Blue Arries' REPRODUCTIONS PROJECTED UNIT SALES 2020 ITEMS: Chairs Tables January 1,020 200 February 1,195 240 March 1,175 245 1,200 250 1,200 255 June 1,195 255 1,150 August 1,200 250 September 1,220 240 October 1,215 250 November 1,210 December 1,190 January 2021 1,050 May 120 125 120 130 245 125 120 130 125 245 260 125 120 235 125 Planners project the Blue Aggies' Reproductions balance sheet at January 1, 2020, to be as follows: Blue Aggies' REPRODUCTIONS BALANCE SHEET JANUARY 1, 2020 $ 50,000 Bank Loan 575,100 360,000 Shareholder's Equity $ 985,100 Total $ Cash Accounts Receivable Machinery (NBV) Total 0 985 100 $ 985,100 REQUIRED: a) Prepare a monthly sales budget. b) Prepare a monthly production budget. c) Prepare a monthly labor or staffing budget. d) Prepare a monthly expense budget. e) Prepare a pro forma income statement for December 31, 2020. f) Prepare a monthly cash receipts budget. B) Prepare a monthly cash disbursements budget. h) Prepare a monthly cash budget. ) Prepare a pro forma balance sheet for December 31, 2020, - Managerial Accounting Blue Aggies' Reproductions makes reproductions of antique tables and chairs and sells them through three sales outlets. The product line consists of two styles of chairs, two styles of tables, and three styles of cabinets. Although customers often ask Blue Martin, the owner/manager of Blue Aggies' Reproductions, to make other products, he does not intend to expand the product line. The planning group at Blue Aggies' Reproductions prepares a master budget for each fiscal year, which corresponds to the calendar year. It is December 2019, and the planners are completing the master budget for 2020. Unit prices are $300, $800, and $1,900 for the chairs, tables, and cabinets, respectively. Customers pay (1) by cash and receive a 5% discount, (2) by credit card (the credit card company takes 4% of the revenue as its fee and remits the balance in the month following the month of sale), or (3) on account (only exporters buy on account). The distribution of cash, credit card, and exporter sales is 25%, 35%, and 40%, respectively. Of the credit sales to exporters, Blue Aggies Reproductions collects 30% in the month following the sale, 50% in the second month following the sale, and 17% in the third month following the sale, with 3% going uncollected. Blue Aggies' Reproductions recognizes the expense of cash discounts, credit card fees, and bad debts in the month of the sale. Blue Aggies' employs 40 people who work in the following areas: 15 in administration, sales, and shipping; 2 in manufacturing supervision (director and a scheduler); 9 in manufacturing fabrication and assembly (carpenters); and 14 in manufacturing, finishing, and other areas (helpers, cleaners, and maintenance crew). The carpenter hours required to make the parts for and assemble a chair, table, or cabinet are 0.4, 2.5, and 6, respectively. Production personnel have organized the work so that each carpenter hour worked requires 1.5 helper hours. Therefore, production planners maintain a ratio on average of 1.5 helpers for every carpenter. The company pays carpenters and helpers $25 and $15 per hour, respectively (including all benefits). Blue Aggies' Reproductions guarantees all employees pay for at least 175 hours per month regardless of the hours of work available. When the employees are not doing their regular jobs, they undertake maintenance, training, community service, and customer relations activities. Blue Aggies' pays each employee weekly for that week's work. If an employee works 175 hours or less during the month, Blue Aggies' still pays the employee for 175 hours at his or her normal hourly rate. The company pays 150% of the normal hourly rate for every hour over 175 that the employee works during the month. Planners add new carpenters if the projected total monthly overtime is more than 5% of the total regular carpenter hours available. Blue Aggies' has a policy of no employee layoffs. Any required hiring is done on the first day of each month. For a factory, Blue Aggies' Reproductions rents a converted warehouse that costs $600,000 per year. The company pays rent quarterly beginning January 1 of each year. Blue Aggies' pays other fixed manufacturing costs, which include manufacturing supervision salaries and amount to $480,000 annually, paid in equal monthly amounts. The capital investment policy is to purchase, each January and July, $5,000 of machinery and equipment per carpenter employed during that month. Blue Argies' recognizes depreciation at the rate of 10% of the year-end balance of the machinery and equipment account. Statistical studies of cost behavior have determined that supplies, variable support, and maintenance costs vary with the number of carpenter hours worked and are $5, $20, and $15 per hour, respectively. The units of wood required for chairs, tables, and cabinets are 1.8 and 15, respectively. Each unit of wood costs $30. The inventory policy is to make and store 10% of next month's products in the month before they will be sold. Two suppliers deliver raw materials and supplies as required. The company pays for all materials, supplies, variable support, and maintenance items on receipt. Annual administration salaries, fixed selling costs, and planned advertising expenditures are $300,000, $360,000, and $600,000, respectively. Blue Aggies' Reproductions makes these expenditures in equal monthly amounts. Packaging and shipping costs for chairs, tables, and cabinets are $15, $65, and $135, respectively. Variable selling costs are 6% of each product's list price. Blue Aggies' Reproductions pays packaging, shipping, and variable selling costs as incurred. Using its line of credit, Blue Aggies' Reproductions maintains a minimum cash balance of $50,000. All line-of-credit transactions occur on the first day of each month. The bank charges interest on the line of credit account balance at the rate of 12% per year. Blue Aggies' pays Interest on the first day of each month on the line-of-credit balance outstanding at the end of the previous month. On the first of each month, the bank pays interest at the rate of 4% per year on funds exceeding $50,000 in the company's cash account at the end of the previous month. Realized sales for October and November and expected sales for December 2019 appear in the following table: Blue Argies' REPRODUCTIONS UNIT SALES 2019 ITEMS: October November December Chairs 1,000 1075 975 Tables 195 210 Cabinets 122 105 198 Cabinets 110 120 April Sales staff estimates the unit demand for 2020 as follows: Blue Arries' REPRODUCTIONS PROJECTED UNIT SALES 2020 ITEMS: Chairs Tables January 1,020 200 February 1,195 240 March 1,175 245 1,200 250 1,200 255 June 1,195 255 1,150 August 1,200 250 September 1,220 240 October 1,215 250 November 1,210 December 1,190 January 2021 1,050 May 120 125 120 130 245 125 120 130 125 245 260 125 120 235 125 Planners project the Blue Aggies' Reproductions balance sheet at January 1, 2020, to be as follows: Blue Aggies' REPRODUCTIONS BALANCE SHEET JANUARY 1, 2020 $ 50,000 Bank Loan 575,100 360,000 Shareholder's Equity $ 985,100 Total $ Cash Accounts Receivable Machinery (NBV) Total 0 985 100 $ 985,100 REQUIRED: a) Prepare a monthly sales budget. b) Prepare a monthly production budget. c) Prepare a monthly labor or staffing budget. d) Prepare a monthly expense budget. e) Prepare a pro forma income statement for December 31, 2020. f) Prepare a monthly cash receipts budget. B) Prepare a monthly cash disbursements budget. h) Prepare a monthly cash budget. ) Prepare a pro forma balance sheet for December 31, 2020