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Waterways Continuing Problem 09 Waterways Corporation is preparing its budget for the coming year, 2020. The first step is to plan for the first quarter of that coming year. The company has gathered information from its managers in preparation of the budgeting process. Sales Unit sales for November 2019 111,000 Unit sales for December 2019 101,000 Expected unit sales for January 2020 113,000 Expected unit sales for February 2020 113,000 Expected unit sales for March 2020 118,000 Expected unit sales for April 2020 124,000 Expected unit sales for May 2020 137,000 Unit selling price $12 Waterways likes to keep 10% of the next month's unit sales in ending inventory. All sales are on account. 85% of the Accounts Receivable are collected in the month of sale, and 15% of the Accounts Receivable are collected in the month after sale. Accounts receivable on December 31, 2019, totaled $181,800. Direct Materials Direct materials cost 80 cents per pound. Two pounds of direct materials are required to produce each unit. Waterways likes to keep 5% of the materials needed for the next month in its ending inventory. Raw Materials on December 31, 2019, totaled 11,300 pounds. Payment for materials is made within 15 days. 50% is paid in the month of purchase, and 50% is paid in the month after purchase. Accounts Payable on December 31, 2019, totaled $102,740. Direct Labor Labor requires 12 minutes per unit for completion and is paid at a rate of $6 per hour. Manufacturing Overhead Indirect materials 30 per labor hour Indirect labor 50 per labor hour Utilities 50 per labor hour Maintenance 30 per labor hour Salaries $42,000 per month Depreciation $17,300 per month Property taxes $2,600 per month Insurance $1,300 per month Maintenance $1,200 per month Selling and Administrative Variable selling and administrative cost per unit is $1.40. Advertising $15,000 a month Insurance $1,300 a month Salaries $71,000 a month Depreciation $2,600 a month Other fixed costs $2,700 a month Other Information The Cash balance on December 31, 2019, totaled $103,000, but management has decided it would like to maintain a cash balance of at least $800,000 beginning on January 31, 2020. Dividends are paid each month at the rate of $2.30 per share for 4,940 shares outstanding. The company has an open line of credit with Romney's Bank. The terms of the agreement requires borrowing to be in $1,000 increments at 6% interest. Waterways borrows on the first day of the month and repays on the last day of the month. A $480,000 equipment purchase is planned for February For the first quarter of 2020, prepare a sales budget. WATERWAYS CORPORATION Sales Budget For the First Quarter of 2020 First Quarter January February Direct Labor . . March Quarter Direct Materials . Expected Unit Sales : $ For the first quarter of 2020, prepare a production budget. WATERWAYS CORPORATION Production Budget For the Month Ending March 2020 First Quarter January February March Quarter Expected Unit Sales Add: Expected Unit Sales Beginning Finished Goods Unit . Less : : Total Required Units Direct Materials Per Unit For the first quarter of 2020, prepare a direct materials budget. (Round cost per pound to 2 decimal places, e... 0.25 and all other answers to decimal places, e.g. 2,520.) WATERWAYS CORPORATION Direct Materials Budget March 2020 First Quarter January February March Quarter Direct Labor Time Per Unit Total Cost of Direct Materials Purchases ! Total Direct Labor Cost . Total Required Direct Labor Hours Direct Materials Purchases Add ! Units to be produced Direct Materials Purchases . Direct Materials Purchase Direct Materials Per Unit . For the first quarter of 2020, prepare a direct labor budget. (Round time per unit to nearest hour, c.9. 30 minutes will be rounded to 0.5 hours) WATERWAYS CORPORATION Direct Labor Budget For the Month Ending March 2020 First Quarter January February March Quarter Direct Materials Per Unit Direct Materials Purchases Total Materials Required . Total Materials Required . Total Required Direct Labor Hours . For the first quarter of 2020, prepare a manufacturing overhead budget. (Round overhead rate to 2 decimal places, 6.9.5.25 and all other answers to decimal places, c.g. 2,520. List Variable costs first.) WATERWAYS CORPORATION Manufacturing Overhead Budget For the First Quarter of 2020 First Quarter January February March Quarter Depreciation Direct Labor Hours $ Fred Costs . Total Fixed Costs Indirect labor Indirect Materials Insurance Maintenance . Maintenance Predetermined overhead rate for the quarter Property Taxes . . Salaries Total Manufacturing Overhead Total Variable Cout Utilities Variable Costs For the first quarter of 2020, prepare a selling and administrative budget. (Enter per unit expenses rounded to 2 decimal places. E.g. 1.25) WATERWAYS CORPORATION Selling and Administrative Expense Budget For the First Quarter of 2020 First Quarter January February March Quarter Advertising . Budget Sales In Units . Depreciation $ Insurance Other Salaries Total Fixed Expenses . Totals & Expenses Total Variable S&A Expense . Variable Expenses Per Unit Fixed Expenses For the first quarter of 2020, prepare a schedule for expected cash collections from customers. Schedule of Expected Collections from Customers January February March Quarter Accounts receivable, 12/31/19 January sales February sales March sales Total cash collections For the first quarter of 2020, prepare a schedule for expected payments for materials purchases. (Round answers to decimal places, 6.9. 2,520.) Schedule of Expected Cash Payments for Purchases February March Quarter Accounts payable, 12/31/19 January January February March Total payments March 2020 First Quarter January February March Quarter Beginning Cash Balance . Add Borrowings Collections From Customers Direct Labor Add Direct Materials Disbursements : Dividends Ending Cash Balance : Equipment Purchase Excess (Deficiency) of Available Cash Over Cash Disbursements Financing . Interest . Manufacturing Overhead Receipts Lesso Repayments Add : Selling And Administrative Total Available Cash Total Disbursements