Name: Course Date Klandon Company manufactures decorative rocks for aquariums. Kim Klandon s preparing the budget for the quarter ended June 30. She has gathered the following information- Klandon's sales manager re ported that the compan d 12,000 bags of rocks in March. He has developed the following sales forecast. The expected sales price is S10 per bag April 20,000 bags June 30,000 bags 25,000 bags 15,000 bags August 3 Sales personnel receive a 5 percent commission on every bag of rocks sol The following monthly fixed ling and administrative expenses are planned for the quarter. However, these amounts do not nclude the depreciation increase resulting from the budgeted cquipment purchase in June (sce part 7 Monthly Fixed Selling and Administrative Depreciation 310.0001 Salaries of sales personnel 25,000 30.50 Advertising ,000 Management Miscellaneous 46500 Total costs A2 The standard labor allowed for one bag ofrocks is 15 minutes. The current direct labor rate is S10 per hour. 4 After experiencing difficulty in supplying customers in a ti mely fashion due to in ventory shortages, the company established a policy requiring the ending finished good inventory to equal 20 percent of the following month's budgeted sales, in units. On March 31, 4,000 bags were on hand S Five pounds of raw materials are required to fill each bag of finished rocks. The company wants to have raw materials on hand at the end of each month equal o 10 percent of the following month's oduction needs. On March 3 3,000 pounds of materials were on hand. The raw materials used in uction cost S0.4 Half of the month's chases is paid for in the month of chase: the other half, in the following month. No discount s available. On June the company plans to spend $48. 000 to upgrade its equipment that is fully depreciated. The new cquipment is expected to have a five-year life, with no residual value. R The budgeted monthly variable and total fixed overhead are as follo Variable overhead is based on the number of units produced The fixed overhead budget is based on an annual on of 000 bags. Indirect materials l.000 30.05 Indirect labor 10,000 0.20 Utilities 120,000 0.10 Property taxes 5,000 60000 Maintenan All sales are made on account. Historically, the company has collected 70 perce nt of its sales in the month of sale and 25 percent in the month following the sale. The remaining 5 percent of sales is uncollectible Klandon must maintain a minimum cash balance of S30,000. An open line of credit at a local bank allows the company to bomow up to S175,000 per quarter in S1,000 increments All borrowing is done at the beginning of the month, and all repayments are made at the end of a month n S1,000 increments. Accrued interest is paid only when principal is repaid. The interest rate is 12 11 percent per year. 12. A quarterly dividend of S49 000 will be declared and paid in April ncome taxes payable for the first quarter w be paid. on April 15 Klandon s tax rate is 30 cent. 14. The March 31 balance sheet is as follows Accounts receivable 30,000 Finished goods inventory 26000 Raw materials inventory 5,200 Plant & equipment 200,000 Accumulated Depreciation Total assets Accounts payable 312,000 Income taxes payable 50,000 Common stock 52,000 Retained Bannings Total liabilities and equities Name: Course Date Klandon Company manufactures decorative rocks for aquariums. Kim Klandon s preparing the budget for the quarter ended June 30. She has gathered the following information- Klandon's sales manager re ported that the compan d 12,000 bags of rocks in March. He has developed the following sales forecast. The expected sales price is S10 per bag April 20,000 bags June 30,000 bags 25,000 bags 15,000 bags August 3 Sales personnel receive a 5 percent commission on every bag of rocks sol The following monthly fixed ling and administrative expenses are planned for the quarter. However, these amounts do not nclude the depreciation increase resulting from the budgeted cquipment purchase in June (sce part 7 Monthly Fixed Selling and Administrative Depreciation 310.0001 Salaries of sales personnel 25,000 30.50 Advertising ,000 Management Miscellaneous 46500 Total costs A2 The standard labor allowed for one bag ofrocks is 15 minutes. The current direct labor rate is S10 per hour. 4 After experiencing difficulty in supplying customers in a ti mely fashion due to in ventory shortages, the company established a policy requiring the ending finished good inventory to equal 20 percent of the following month's budgeted sales, in units. On March 31, 4,000 bags were on hand S Five pounds of raw materials are required to fill each bag of finished rocks. The company wants to have raw materials on hand at the end of each month equal o 10 percent of the following month's oduction needs. On March 3 3,000 pounds of materials were on hand. The raw materials used in uction cost S0.4 Half of the month's chases is paid for in the month of chase: the other half, in the following month. No discount s available. On June the company plans to spend $48. 000 to upgrade its equipment that is fully depreciated. The new cquipment is expected to have a five-year life, with no residual value. R The budgeted monthly variable and total fixed overhead are as follo Variable overhead is based on the number of units produced The fixed overhead budget is based on an annual on of 000 bags. Indirect materials l.000 30.05 Indirect labor 10,000 0.20 Utilities 120,000 0.10 Property taxes 5,000 60000 Maintenan All sales are made on account. Historically, the company has collected 70 perce nt of its sales in the month of sale and 25 percent in the month following the sale. The remaining 5 percent of sales is uncollectible Klandon must maintain a minimum cash balance of S30,000. An open line of credit at a local bank allows the company to bomow up to S175,000 per quarter in S1,000 increments All borrowing is done at the beginning of the month, and all repayments are made at the end of a month n S1,000 increments. Accrued interest is paid only when principal is repaid. The interest rate is 12 11 percent per year. 12. A quarterly dividend of S49 000 will be declared and paid in April ncome taxes payable for the first quarter w be paid. on April 15 Klandon s tax rate is 30 cent. 14. The March 31 balance sheet is as follows Accounts receivable 30,000 Finished goods inventory 26000 Raw materials inventory 5,200 Plant & equipment 200,000 Accumulated Depreciation Total assets Accounts payable 312,000 Income taxes payable 50,000 Common stock 52,000 Retained Bannings Total liabilities and equities