1. Martin Manufacturing is preparing its master budget for the first quarter of the upcoming year. The following data pertain to Martin Manufacturings operations:

The data from the list are as follows:

• Current Assets as of December 31 (prior year):

  • Cash: $ 4,500

  • Accounts receivable, net: $ 47,000

  • Inventory: $ 15,700

• Property, plant, and equipment, net: $120,000

• Accounts payable: $ 42,400

• Capital stock: $124,000

• Retained earnings: $ 23,100

1. a. Actual sales in December were $70,000. Selling price per unit is projected to remain stable at $10 per unit throughout the budget period. Sales for the first five months of the upcoming year are budgeted to be as follows:

The data from the list are as follows:

• January: $ 80,000

• February: $ 92,000

• March: $ 99,000

• April: $ 97,000

• May: $ 85,000.

1. b. Sales are 30% cash and 70% credit. All credit sales are collected in the month following the sale.
2. c. Martin Manufacturing has a policy stating that each months ending inventory of finished goods should be 25% of the following months sales (in units).
3. d. Of each months direct materials purchases, 20% are paid for in the month of purchase, while the remainder is paid for in the month following purchase. Two pounds of direct material is needed per unit at $2 per pound. Ending inventory of direct materials should be 10% of next months production needs.
4. e. Most of the labor at the manufacturing facility is indirect, but there is some direct labor incurred. The direct labor hours per unit is 0.01. The direct labor rate per hour is $12 per hour. All direct labor is paid for in the month in which the work is performed. The direct labor total cost for each of the upcoming three months is as follows:

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1. f. Monthly manufacturing overhead costs are $5,000 for factory rent, $3,000 for other fixed manufacturing expenses, and $1.20 per unit for variable manufacturing overhead. No depreciation is included in these figures. All expenses are paid in the month in which they are incurred.
2. g. Computer equipment for the administrative offices will be purchased in the upcoming quarter. In January, Martin Manufacturing will purchase equipment for $5,000 (cash), while Februarys cash expenditures will be $12,000 and Marchs cash expenditures will be $16,000.
3. h. Operating expenses are budgeted to be $1.00 per unit sold plus fixed operating expenses of $1,000 per month. All operating expenses are paid in the month in which they are incurred. No depreciation is included in these figures.
4. i. Depreciation on the building and equipment for the general and administrative offices is budgeted to be $4,600 for the entire quarter, which includes depreciation on new acquisitions.
5. 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). 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.
6. k. The companys income tax rate is projected to be 30% of operating income less interest expense. The company pays $10,000 cash at the end of February in estimated taxes.

1. Requirement 1 begins with the Sales Budget. Please show your work.

2. SALES BUDGET:
   			Jan	Feb	Mar	Quarter
   Budgeted unit sales
   Selling price per unit
   Total Sales