*ONLY 2 PARTS ARE NEEDED HELP ON* (I left them blank at the bottom). I have the majority of this question done, I just need help on this part. I have not been able to get help for a week on this problem. It's not hard and lengthy, I know that. I just don't know how to do it. if someone could help, that would be GREATLY appreciated!
Quaint Stem Company is a high-end glassware manufacturer that produces fine stemware of the highest quality. The company is completing its fourth year of operations and is preparing to build its master budget for the coming year (2021). The budget will detail each quarter's activity and the activity for the year in the total. The master budget will be based on the following information: a. Fourth-quarter sales for 2020 are 80,000 units and 70,000 for the first quarter of 2022. b. Unit sales by quarter (for 2021) are projected as follows: First quarter 66,000 Second quarter 70.000 Third quarter 74,000 Fourth quarter 84,000 The selling price is $84 per unit. Cash sales make up 20% of all sales. Quaint collects 80 percent of the credit sales within the quarter in which they are realized; the other 20 percent are collected in the following quarter. There are no bad debts. c. The beginning inventory of finished goods is 16,000 units. Required ending inventory is 25% of the next quarter's sales in units. d. Each stemware unit uses one and a half hours of direct labor and two units of direct materials. Laborers are paid $25.00 per hour, and one unit of direct materials costs $10. e. There are 10,400 units of direct materials in beginning inventory as of January 1, 2020. At the end of each quarter, Quaint plans to have 15 percent of the direct materials needed for next quarter's unit sales. The ending unit of direct materials on hand at the end of the year was 23,000. f. Quaint buys direct materials on account. Half of the purchases are paid for in the quarter of acquisition and the remaining half are paid for in the following quarter. Wages and salaries are paid on the 15th and 30th of each month. g. Fixed overhead totals $677,181 for each of the first three quarters. Of this total, $255,000 represents depreciation. During the fourth quarter, the depreciation increases by $19,575 and total fixed overhead increases by $24.649. All fixed expenses other than depreciation are paid for in cash in the quarter incurred. The fixed overhead rate is computed by dividing the year's total fixed overhead by the year's expected actual units produced. h. Variable overhead is budgeted at $4.50 per direct labor hour. All variable overhead expenses are paid for in the quarter incurred. i. Fixed selling and administrative expenses total $330.000 per quarter, including $50,000 depreciation. Variable selling and administrative expenses are budgeted at $6.50 per unit sold. All selling and administrative expenses are paid for in the quarter incurred. j. The balance sheet as of December 31, 2020, is as follows: ASSETS LIABILITIES and STOCKHOLDERS'EQUITY $ 680,000 Cash Accounts Receivable Raw Materials Inventory Finished Goods Inventory Plant and equipment, net Total Assets $ 52,000 Accounts Payable 1,275,000 104,000 808,000 Capital Stock 6,360,000 Retained Earnings $ 8.599.000 Total Liab. & Equity 7,390,000 529.000 $8.599.000 k. Quaint has a required cash balance of $25,000. An operating line of credit is available up to $250.000 at 8% interest. All borrowings and payments must be made in increments of $10,000 and interest is paid when principal is paid. All borrowings take place at the beginning of the quarter and all payments take place at the end of the quarter. 1. Quaint will pay quarterly dividends of $22,000. At the end of the third quarter, $625,000 of equipment will be purchased and at the end of the fourth quarter, $325,000 of equipment will be purchased m. The income tax rate is 30%. Required Prepare a master budget for Quaint Stem Company for each quarter of 2021 and for the year in total. The following component budgets must be included: a. Sales budget b. Production budget c. Direct materials purchases budget d. Direct labor budget e. Overhead budget f. Ending finished goods inventory budget g. Cost of goods sold budget h. Selling and administrative expenses budget i Cash budget j. Pro forma income statement k. Pro forma balance sheet Quaint Stem Company For 2021 Year OPERATING BUDGET Sales Budget Units Unit selling price Budgeted sales 1 66,000 84 5,544,000 Quarter 2 70,000 74,000 84 84 5,880,000 6,216,000 4 84,000 84 7,056.000 Year 294,000 84 24,696,000 4 1 last year next year 80,000 70,000 84 84 6,720,000 5,880,000 Production Budget Sales in units Desired ending inventory Total needs Less: Beginning inventory Units to be produced 1 66,000 17,500 83,500 16,000 67,500 Quarter 2 70,000 18,500 88,500 17,500 71,000 3 74,000 21,000 95,000 18,500 76,500 4 84,000 17,500 101,500 21,000 80,500 Year 294,000 17,500 311,500 16.000 295,500 Units to be produced Direct materials per unit Production needs Desired ending inventory Total needs Less: Beginning inventory Direct materials to be purchased Cost per unit Total material purchase cost Direct Materials Purchases Budget Quarter 1 2 3 67,500 71,000 76,500 2 2 2 135,000 142,000 153,000 21,300 22,950 24,150 156,300 164,950 177,150 20,250 21,300 22,950 136,050 143,650 154,200 10 10 10 1,360,500 1,436,500 1,542,000 4 80,500 2 161,000 23,000 184,000 24,150 159,850 10 1,598,500 Year 295,500 2 591,000 23,000 614,000 10,400 603,600 10 6,036,000 Units to be produced Direct labor time per unit in hours Total hours needed Average wage per hour Total direct labor cost Direct Labor Budget Quarter 1 2 3 67,500 71,000 76,500 1.5 1.5 1.5 101,250 106,500 114,750 25.00 25.00 25.00 2,531,250 2,662,500 2,868,750 4 80,500 1.5 120,750 25.00 3,018,750 Year 295,500 1.5 443,250 25.00 11,081,250 Budgeted direct labor hours Variable overhead rate Budgeted variable overhead Budgeted fixed overhead Total overhead Overhead Budget Quarter 1 2 3 101,250 106,500 114,750 4.50 4.50 4.50 455,625 479,250 516,375 677,181 677,181 677,181 1,132,806 1,156,431 1,193,556 4 120,750 4.50 543,375 701,830 1,245,205 Year 443,250 4.50 1,994,625 2,733,373 4,727,998 Note: depreciation in fixed overhead Unit product cost for ending inventory budget: Direct materials Direct labor Variable overhead Fixed overhead Total unit cost Total finished goods units for end of year Total ending finished goods inventory 20.00 37.50 6.75 9.25 73.50 17,500 1,286,250 Cost of Goods Sold Budget Quarter 1 2 3 1,350,000 1,420,000 1,530,000 2,531,250 2,662,500 2,868,750 1,132,806 1,156,431 1,193,556 4 1,610,000 3,018,750 1,245,205 Direct materials used Direct labor used Overhead Budgeted manufacturing costs Beginning finished goods Cost of goods available for sale Less: Ending finished goods Budgeted cost of goods sold Year 5,910,000 11,081,250 4,727,998 21,719,248 808,000 22,527,248 1,286,250 21,240,998 Planned sales in units Variable selling and admin exp per unit Total variable expense Fixed selling and admin expense Total selling and admin expenses Selling and Administrative Budget Quarter 1 2 3 66,000 70,000 74,000 6.50 6.50 6.50 429,000 455,000 481,000 380,000 380,000 380,000 809,000 835,000 861,000 4 84,000 6.50 546,000 380,000 926,000 Year 294,000 6.50 1,911,000 1,520,000 3,431,000 Note: depreciation in fixed selling and admin expense Sales Less: Cost of goods sold Gross margin Less: Seling and admin expenses Operating income Less: Interest expense Income before income taxes Less: Income taxes Net income Proforma Income Statement Year 24,696,000 21,240,998 3,455,002 3,431,000 24,002 End of operating budget FINANCIAL BUDGET Cash Collections Quarter 2 1 3 4 Cash Sales Received on account from: Quarter 4, prior year Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total cash receipts Cash Payments Quarter 2 1 4 Quarter 4, prior year Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total cash needed Cash Budget Quarter 2 1 3 4 Year Beginning cash balance Cash sales and collections on account Total cash available Less disbursements: Payments for: Raw materials Direct labor Overhead Selling and admin expenses Income taxes Dividends Equipment Total disbursements Excess (Deficiency) of cash available over needs Financing Borrowings Repayments Interest Total financing Ending cash balance
