Master Budget Case Study 2021 B

SM Skateboards has asked you to consult with them in the preparation of a budget for January and February 202X. The company has approached a lender/investor who is interested in this information as part of the due diligence process.

Please prepare the following schedules given the information below.

Sales Budget

Sales for December 700 units

January 500 units

February 600 units

March 800 units

Selling price per unit $ 80 per unit

Production Budget

Ratio of inventory to future sales is 60%. Beginning inventory for January is 300 units.

Materials Budget

Materials requirements per unit 3 lbs. and the price per lb. is $ 8.

Direct Labor Budget

Direct labor requirements per unit is 30 minutes and the direct labor rate is $16 per hour.

Manufacturing Overhead Budget

Variable factory overhead rate based on direct labor hours is $ 2.00. Fixed overhead is $1900 per month.

Selling Expense Budget

Sales commissions are 15% and the sales managers salary is $ 2500 per month.

General and Administrative Budget

Administrative salaries are $5,000 per month.

Cash Receipts from Sales

30% in the month of sale and the balance in the following month. The Accounts receivables from December are $39,200.

Cash Payments for Materials

50% in the month of purchase and the balance in the following month. Use $ 500 for the carryover from the month of December.