P22-42. Developing a Master Budget for a Manufacturing Organization: Challenge Problem LO3, 4 Electric Monkey Computer Accessories assembles a computer networking device from kits of imported components. You have been asked to develop a quarterly and annual operating budget and pro forma income statements for next year. You have obtained the following information: Beginning-of-year balances Cash ......... . $ 75,000 Accounts receivable (previous quarter's sales). . . . . . . . $245,000 Flaw materials . . . . . . 950 kits Finished goods .. ... . .. . . . . . . 1,500 kits Accounts payable (materials) . $125,000 Borrowed funds. .................... $ 30,000 Desired end-of-year inventory balances Raw materials....... . . . . . . . . .. 1,000 kits Finished goods . . . . . . . 1.600 kits Desired end-of-quarter balances Cash . . . . . . . . . . $ 30,000 Raw materials as a portion of the following quarter's production . .. . .. . . . . . . 0.20 Finished goods as a portion of the following quarter's sales. . . . . . 0.30 Manufacturing costs Standard cost per unit Units Unit price Total Raw materials . ... .. . . . . 1 kit $75.00 $75.00 Direct labor hours at rate. . . .. 0.50 hour $30.00 15.00 Variable overhead/labor hour . . . . 0.50 hour $ 5.00 2.50 Total standard variable COST...... . . 1 1 1 1 $92.50 contrivedcontinued from previous page Fixed cost per quarter Cash... . .4 8 894. $110,000 Depreciation . . . . . 15,000 Total. . . $125,000 Selling and administrative costs Variable cost per unit... . . . . $8.00 Fixed costs per quarter Cash.. . . .1 8 8181 $150,000 Depreciation 7,500 Total. . $157,500 Interest rate per quarter . . . 0.015 Portion of sales collected Quarter of sale . .. 0.70 Subsequent quarter . ... 0.29 Bad debts......... 0.01 Portion of purchases paid Quarter of purchase.......as 0.60 Subsequent quarter . 0.40 Unit selling price. ... . . . . . . $225.00 Sales forecast Quarter . . . . . . First Second Third Fourth Unit sales . . . . . 4,400 4,600 4,500 4,800 Additional information All cash payments except purchases are made quarterly as incurred. All borrowings occur at the start of a quarter. All repayments on borrowings occur at the end of a quarter. At the time the principal is repaid, interest is paid on the portion of principal that is repaid. Borrowings and repayments may be made in any amount. Required a. A sales budget for each quarter and the year. (Hint: Use of spreadsheet software strongly recom- mended for this problem.) b. A production budget for each quarter and the year. c. A purchases budget for each quarter and the year. d. A manufacturing cost budget for each quarter and the year. e. A selling and administrative expense budget for each quarter and the year. f. A cash budget for each quarter and the year. g. A pro forma contribution income statement for each quarter and the year