Myra Manufacturing is located in Ballarat and has just commenced business; the

projected sales for the first four months of operations:

Units Dollars

January $25,000$ $$450,000$

February $30,000$ $$540,000$

March $32,000$ $$576,000$

April $35,000$ $$630,000$

The product sells for $$18$ per unit. Twenty five percent of the customers are expected to pay in the month of sale and take a $3$ percent discount; $70$ percent are expected to pay in the month following sale. The remaining $5$ percent will never pay.

It takes $2$ kilograms of material to produce one unit of product. The material costs

$$0\mathrm{.}75$ per kilogram. In January no raw materials are in beginning inventories, but

the managers want to end each month with enough materials for $20$ percent of the

next month's production. The company pays for $60$ percent of its material purchases

in the month of purchase and $40$ percent in the month following purchase.

It takes $0\mathrm{.}5$ hours of labour to produce each unit. Labour is paid at $$15$ per hour and

it is paid in the same month that production occurs. Overhead is estimated to be $$2$

per unit produced plus $$25,000$ per month $($including depreciation of $$12,000).$ Overhead costs are paid as incurred.

Myra will begin January with no finished goods or work in process inventory. The

managers wish to end each month with $25$ percent of the following month's sales in

finished goods inventory. They will not plan for any ending work in process inventory.

Required:

Prepare the following budgets:

$1.$ Production budget for January and February

$2.$ Direct material purchases budget for January and February

$3.$ Direct labour budget for January and February

$4.$ Overhead budget for January and February

$5.$ Cash budget for February.

The company will begin February with a cash

balance of $$80,000.$