Master Budget, Cash Budget and Budgeted Income Statement After two years study at ASM, you finally graduate and start a job as Junior accountant at Glow Inc. Your manager is responsible for the nationwide distribution of creator design product lines. Due to the prevalence of the social media, the company has grown rapidly, and the rapid growth in its lighting products forces the management team to improve their production efficiency. You have just been given responsibility for the planning and budgeting of the entire lighting set division. Today is your first day, you have just given an assignment to prepare master budget for the manager, who needs to present the budget and discuss the financial objectives with the shareholders tomorrow. During your job interview, you clearly stated that you gained managerial accounting knowledge and hand on experience during your study at ASM. Your first assignment is to prepare a master budget for the next fiscal year, starting January 1, 2023 and your co-work has left a pile of files on your desk including the sale records, product information, manufacture schedule and supplier pricing list. Now, you realized that you should have pay more attention in class. Now, you dont know where to start. Fortunately, you remember that you still kept a copy spreadsheet of the master budget template in your laptop from the accounting course. Note: Sales and Marketing Glow products are sold to retailers for $75 each and the sales have been in demand due to the Covid-19. However, the marketing department has been conservative toward the end of the year due market saturation. The marketing department has just sent you their forecasted quarter sales and marketing budget. Quarter 2023 Q1 2023 Q2 2023 Q3 2023 Q4 2024 Q1 2024 Q2 Sales in Unit 25,000 26,000 25,000 26,000 29,000 30,000 Advertising $25,000 $25,000 $27,000 $27,000 $30,000 $30,000 Production and Inventory Ending finished goods inventories are supposed to be equal to 30% of the next quarters sales in units. Glow currently does its own assembly production in house. Each unit consists of 2 LED panels and the cost of each is $10. Each unit needs 1 labour hour from assemble to finish package. The hourly pay rate to the assembling workers is $15 per hour. The production manager also required desired direct material ending inventory to 30% of the next quarter production. Product and Period Costs Below is a display of the Glow division quarterly manufacture overhead and selling and administrative expenses: Manufacture Overhead Variable: Indirect labour $5 per labour hour Indirect Materials $2 per labour hour Fixed: Wages and Salaries $6,000 Utilities $4,000 Maintenance $2,000 Insurance $7,000 Depreciation $7,000 Rent $10,000 Selling and Administrative Variable: Sales Commissions $5 per unit Fixed (quarterly): Wages and Salaries $100,000 Utilities $18,000 Insurance $6,000 Depreciation $5,000 Miscellaneous $9,000 Cash, Accounts Receivable and Accounts Payable The company desires a minimum ending cash balance each quarter on $250,00. All sales to the distributors are made on credit terms with no discount (for now), and payable within 45 days. The Glow has determined that only 75% of sales are collected by the end of the quarter in which the sale occurred. The rest 25% is collected in the quarter following the sale. Purchases are paid for in the following manner: 50% in the quarter of the purchase and the remaining 50% paid in the quarter following the purchase. Additional Information Labour, Manufacture Overhead, and Selling and Administrative expenses are all paid during the month, in cash, with the exception of depreciation (of course). Glow will make a purchase of a warehouse during the second quarter of 2022 for $950,000 cash. Glows balance sheet at the end of the fourth quarter last year is shown below: Assets Cash $250,000 Accounts receivable $250,000 (uncollected from Q4 last year) Liabilities Accounts payable $200,000 (unpaid from Q4 last year) An agreement with Bank of the West allows Glow to borrow up to a total loan amount of $500,000 (maximum amount). The interest rate on these loans is 12% annually Required: Prepare a master budget for 2023. Include the following budget schedules and financial statements as if there is no income tax 1) Master Budget 2) Cash Budget. Show the cash budget by quarter. 3) Budgeted Income statement by quarter and annual