MASTER BUDGETING PROJECT DUE DATE: WEDNESDAY, DECEMBER 8, 2021 Sweet Discovery Manufacturing Company turns cacao beans into chocolate. Management has asked your accounting team to prepare a complete master budget for the upcoming first quarter of 2022. The following information has already been gathered: A. Sales were 20,000 pounds in December. Forecasted sales in pounds are as follows: a. January 21,000 pounds b. February 19,000 pounds C. March 20,000 pounds d. April 24,000 pounds B. The chocolate sells for $17 per pound and its total product cost is $14.35 per pound C. Company policy calls for a given month's ending finished goods inventory to equal 70% of the next month's expected pound sales. The December 31st finished goods inventory is 16,800 pounds, which does not comply with the policy. D. Company policy calls for a given months' ending raw materials inventory to equal 20% of the next month's material requirement. The December 31st raw materials inventory is 4,375 pounds (which also fails to meet the policy). The budgeted March 31st raw materials inventory is 1,980 pounds. Raw materials cost is $8 per pound. Each finished pound of chocolate requires.5 pounds of cacao beans. E. Each finished pound of chocolate requires .5 hours of direct labor at a rate of $16 per hour. F. Overhead is allocated based upon direct labor hours. The predetermined variable overhead rate is $2.70 per direct labor hour. Depreciation of $20,000 per month is treated as fixed factory overhead. G. Monthly general and administrative expenses include $9,000 of administrative salaries and .9% monthly interest on the long-term note payable. H. Sales representatives' commissions are 10% of sales and are paid in the month of the sales. The sales manager's monthly salary is $3,500 per month. I. The company expects 30% of sales to be for cash and the remaining 70% on credit. Receivables are collected in full in the month following the sale (none are collected in the month of the sale). J. All raw materials purchases are on credit, and no payables arise from any other transactions. Each month's raw materials purchases are fully paid in the next month. K. Dividends of $20,000 are to be declared and paid in February. L. Income taxes payable at December 31st will be paid in January. Income tax expense will be assessed at 35% in the first quarter and paid in April. M. Equipment purchases of $100,000 are budgeted for the last day of March. N. The minimum ending cash balance for all months is $40,000. If necessary, the company borrows enough cash using a short-term note to reach the minimum. Short-term notes require an interest payment of 1% at each month-end (before any repayment). If the ending cash balance exceed the minimum, the excess will be applied to repaying the short-term notes payable balance. Sweet Discovery Manufacturing Company Projected Balance Sheet December 31, 2021 Assets $ 40,000 249,900 Liabilities & Equity Current Liabilities Accounts Payable $ 51,400 Income Taxes Payable 10,000 Short-Term Notes Payable 24,000 Total Current Liabilities Long-Term Notes Payable Total Liabilities $ $ Current Assets Cash Accounts Receivable Inventory: Raw Materials Inventory Finished Goods Inventory Total Inventory Total Current Assets Machinery & Equipment Accumulated Depreciation Net Machinery & Equipment Total Assets 35,000 241,080 85,400 300,000 385,400 276,080 565,980 720,000 (240,000) Common Stock Retained Earnings Total Equity Total Liabilities & Equity 600,000 60,580 480,000 $ 1,045,980 660,580 $ 1,045,980 REQUIRED Prepare the following budgets and other financial information as required. All budgets and other financial information should be prepared for the first-quarter of 2022, except as noted below. Round calculations to the nearest whole dollar. 1. Sales Budget 2. Production Budget 3. Raw Materials Budget 4. Direct Labor Budget 5. Factory Overhead Budget 6. Selling Expense Budget 7. General and Administrative Expense Budget 8. Cash Budget 9. Budgeted Income Statement for the Quarter Ended March 31, 2022 (not for each separate month) 10. Budgeted Balance Sheet as of March 31, 2022