PART I. COMPANY'S INFORMATION (a) Balance Sheet, December 31, Year 0 ASSETS Current Assets Property, Plant and Equipment \begin{tabular}{|l|r|l|} \hline Plant and Equipment & $70,000 & \\ \hline Less: Accumulated Depreciation & $5,000 & $65,000 \\ \hline Total Assets & & $105,250 \\ \hline \end{tabular} LIABILITIES \& STOCKHOLDERS' EQUITY Liabilities \begin{tabular}{l|r|} \hline Accounts Payable & $8,000 \\ \hline Long-term Note & $20,000 \\ \hline \end{tabular} Stockholders' Equity \begin{tabular}{|c|r|} \hline Common Stock & $40,000 \\ \hline Retained Earnings & $37,250 \\ \hline Total Liabilities and Equity & $105,250 \\ \hline \end{tabular} (b) Sales Forecast (units) \begin{tabular}{l|l} \hline January, Year 1 & 4,500 \\ \hline February, Year 1 & 5,500 \\ \hline March, Year 1 & 7,000 \\ \hline April, Year 1 & 7,600 \\ \hline May, Year 1 & 9,000 \end{tabular} Selling Price per Unit $10 (c) Production Requirements and Manufacturing Cost Information Direct material requirement 2 lbs per unit of product cost per It $1.50 \begin{tabular}{l|r|l|} \hline Direct material requirement & 2 lbs per unit of product cost per lbs & $1.50 \\ \hline Direct labor requirement & 0.5 hrs per unit of product cost per DLH & $6.00 \\ \hline Variable Overhead's POR & $1.40 per direct labor hour & \\ \hline \end{tabular} Fixed Overhead per Month \begin{tabular}{|l|r|} \hline Salaries & $680 \\ \hline Utilities & $350 \\ \hline Insurance & $200 \\ \hline Depreciation & $700 \\ \hline Total & $1,930 \\ \hline \end{tabular} (d) Desired Ending Inventories Finished goods 50% of Unit sales in next month Raw material 60% of Quantity (pounds) to be used in production next month (e) Estimated S \& A (selling and administrative) Expenses \begin{tabular}{|l|r|l|} \hline Sales Commissions (Variable) & $0.80 & per Unit sold \\ \hline Salaries (Fixed) & $2,000 & per Month \\ \hline Advertising (Fixed) & $600 & per Month \\ \hline Miscellaneous (Fixed) & $2,345 & Jan only \\ \hline Miscellanenus (Fixed) & $1540 & Foh anh \\ \hline \end{tabular} \begin{tabular}{|l|r|l|} \hline Miscellaneous (Fixed) & $2,345 & Jan only \\ \hline Miscellaneous (Fixed) & $1,540 & Feb only \\ \hline Miscellaneous (Fixed) & $481 & Mar only \\ \hline \end{tabular} (f) Estimated Cash Collections, Cash Payments, Financing and Other Information Cash Collections from Sales 70% Same month of sale 30% Next month Cash payments 60% Same month of purchase for Material Purchases 40% Next month Cash Payment for Dividends $500 End of March \begin{tabular}{l|l} New Equipment Purchase & $3,000 End of March \end{tabular} Cash Payments for Other Items 100% Same month (do not apply to items that need no cash payments) Minimum Cash Level $6,000 (Has to be maintained at the end of each month) (Minimum cash level should be maintained before making interest payment, but after borrowing or repayment.) but after borrowing or repayment.) Bank Loan Borrowing time (If borrowing is needed for a given month, it should occur at the beginning of the month.) Just enough to satisfy the minimum cash level requirement (If repayment is ever made for a given month, it should occur at the beginning of the month) Maximum possible amount after satisfying the minimum cash level requirement 1% per month on outstanding loan balance as of the end of the month To be paid at the end of each month Insurance cost will be charged to (deducted from) Prepaid Insurance. No cash will be paid. Long-term Note is a liability that does not bear interest. PART II. ALL BUDGETSISCHEDULES FOR THE FIRST QUARTER OF Year 1 (1) Sales Budget Expected sales - units Selling price per unit Total sales (2) Schedule of Expected Cash Collections (Cash Receipts Budget) Jan Feb Mar Qtr From sales before January From January sales From February sales From March sales Total cash collections (3) Production Budget Qtr Apr May Expected sales units Desired ending inventory Total needs \begin{tabular}{|} \\ \\ \hline \end{tabular} Less: Beginning inventory Less: Beginning inventory Units to be produced (4) Direct Materials Purchases Budget Units to be produced Material needed per unit (lbs) Production needs (lbs) Desired ending quantity (lbs) Total needs (lbs) Less: Beginning quantity (lbs) Material to be purchased (lbs) Cost of material purchase (\$) (5) Schedule of Expected Cash Disbursements (Cash Disbursements Budget) for Direct Materials Qtr For Purchases before January For January purchases For February purchases For March purchases \begin{tabular}{|} + \\ \\ & \\ \hline \end{tabular} \begin{tabular}{|l|l|} \hline & \\ \hline & \\ \hline & \\ \hline \end{tabular} Total cash disbursements (6) Direct Labor Budget Qtr Units to be produced DL time required per unit Total hours of DL time needed Direct labor cost per hour Cash Disbursements for MOH (8) Selling and Administrative Expense Budget Qtr Budgeted sales in units Variable S\&A expense per unit Budgeted variable expense Budgeted Fixed S\&A expenses Salaries Advertising Miscellaneous Total \begin{tabular}{|} \\ \\ \\ \hline \end{tabular} Total budgeted S\&A expenses (9) Cash Budget Cash balance, beginning Add cash receipts: Collections from sales Total cash available Disbursements: Payments for Material purchases Payments for Direct labor costs Payments for Manufacturing overhead Payments for Selling and administrative Payments for Equipment purchase Payments for Dividends Total Disbursements Excess (Deficiency)* negative amount in ( ) Financing: Bank loan Borrowing (repayment)* * negative amount in ( ) Cash before interest payment Interest payment Cash balance, ending (10) Budgeted Income Statement, for 1st Quarter of Year 1 Qtr Sales Less: Cost of goods sold Gross margin Less: Selling and admin. expenses Net oneratinn income LIABILITIES \& STOCKHOLDERS' EQUITY Liabilities Accounts Payable Long-term Note Bank Loan Stockholders' Equity Common Stock Retained Earnings Total Liabilities and Equity Net operating income Less: Interest expenses Net income (11) Balance Sheet, as of March 31, Year 1 ASSETS Current Assets Cash Accounts Receivable Raw Materials Inventory Finished Goods Inventory Prepaid Insurance Property, Plant and Equipment Plant and Equipment Less: Accumulated Depreciation Total Assets PART I. COMPANY'S INFORMATION (a) Balance Sheet, December 31, Year 0 ASSETS Current Assets Property, Plant and Equipment \begin{tabular}{|l|r|l|} \hline Plant and Equipment & $70,000 & \\ \hline Less: Accumulated Depreciation & $5,000 & $65,000 \\ \hline Total Assets & & $105,250 \\ \hline \end{tabular} LIABILITIES \& STOCKHOLDERS' EQUITY Liabilities \begin{tabular}{l|r|} \hline Accounts Payable & $8,000 \\ \hline Long-term Note & $20,000 \\ \hline \end{tabular} Stockholders' Equity \begin{tabular}{|c|r|} \hline Common Stock & $40,000 \\ \hline Retained Earnings & $37,250 \\ \hline Total Liabilities and Equity & $105,250 \\ \hline \end{tabular} (b) Sales Forecast (units) \begin{tabular}{l|l} \hline January, Year 1 & 4,500 \\ \hline February, Year 1 & 5,500 \\ \hline March, Year 1 & 7,000 \\ \hline April, Year 1 & 7,600 \\ \hline May, Year 1 & 9,000 \end{tabular} Selling Price per Unit $10 (c) Production Requirements and Manufacturing Cost Information Direct material requirement 2 lbs per unit of product cost per It $1.50 \begin{tabular}{l|r|l|} \hline Direct material requirement & 2 lbs per unit of product cost per lbs & $1.50 \\ \hline Direct labor requirement & 0.5 hrs per unit of product cost per DLH & $6.00 \\ \hline Variable Overhead's POR & $1.40 per direct labor hour & \\ \hline \end{tabular} Fixed Overhead per Month \begin{tabular}{|l|r|} \hline Salaries & $680 \\ \hline Utilities & $350 \\ \hline Insurance & $200 \\ \hline Depreciation & $700 \\ \hline Total & $1,930 \\ \hline \end{tabular} (d) Desired Ending Inventories Finished goods 50% of Unit sales in next month Raw material 60% of Quantity (pounds) to be used in production next month (e) Estimated S \& A (selling and administrative) Expenses \begin{tabular}{|l|r|l|} \hline Sales Commissions (Variable) & $0.80 & per Unit sold \\ \hline Salaries (Fixed) & $2,000 & per Month \\ \hline Advertising (Fixed) & $600 & per Month \\ \hline Miscellaneous (Fixed) & $2,345 & Jan only \\ \hline Miscellanenus (Fixed) & $1540 & Foh anh \\ \hline \end{tabular} \begin{tabular}{|l|r|l|} \hline Miscellaneous (Fixed) & $2,345 & Jan only \\ \hline Miscellaneous (Fixed) & $1,540 & Feb only \\ \hline Miscellaneous (Fixed) & $481 & Mar only \\ \hline \end{tabular} (f) Estimated Cash Collections, Cash Payments, Financing and Other Information Cash Collections from Sales 70% Same month of sale 30% Next month Cash payments 60% Same month of purchase for Material Purchases 40% Next month Cash Payment for Dividends $500 End of March \begin{tabular}{l|l} New Equipment Purchase & $3,000 End of March \end{tabular} Cash Payments for Other Items 100% Same month (do not apply to items that need no cash payments) Minimum Cash Level $6,000 (Has to be maintained at the end of each month) (Minimum cash level should be maintained before making interest payment, but after borrowing or repayment.) but after borrowing or repayment.) Bank Loan Borrowing time (If borrowing is needed for a given month, it should occur at the beginning of the month.) Just enough to satisfy the minimum cash level requirement (If repayment is ever made for a given month, it should occur at the beginning of the month) Maximum possible amount after satisfying the minimum cash level requirement 1% per month on outstanding loan balance as of the end of the month To be paid at the end of each month Insurance cost will be charged to (deducted from) Prepaid Insurance. No cash will be paid. Long-term Note is a liability that does not bear interest. PART II. ALL BUDGETSISCHEDULES FOR THE FIRST QUARTER OF Year 1 (1) Sales Budget Expected sales - units Selling price per unit Total sales (2) Schedule of Expected Cash Collections (Cash Receipts Budget) Jan Feb Mar Qtr From sales before January From January sales From February sales From March sales Total cash collections (3) Production Budget Qtr Apr May Expected sales units Desired ending inventory Total needs \begin{tabular}{|} \\ \\ \hline \end{tabular} Less: Beginning inventory Less: Beginning inventory Units to be produced (4) Direct Materials Purchases Budget Units to be produced Material needed per unit (lbs) Production needs (lbs) Desired ending quantity (lbs) Total needs (lbs) Less: Beginning quantity (lbs) Material to be purchased (lbs) Cost of material purchase (\$) (5) Schedule of Expected Cash Disbursements (Cash Disbursements Budget) for Direct Materials Qtr For Purchases before January For January purchases For February purchases For March purchases \begin{tabular}{|} + \\ \\ & \\ \hline \end{tabular} \begin{tabular}{|l|l|} \hline & \\ \hline & \\ \hline & \\ \hline \end{tabular} Total cash disbursements (6) Direct Labor Budget Qtr Units to be produced DL time required per unit Total hours of DL time needed Direct labor cost per hour Cash Disbursements for MOH (8) Selling and Administrative Expense Budget Qtr Budgeted sales in units Variable S\&A expense per unit Budgeted variable expense Budgeted Fixed S\&A expenses Salaries Advertising Miscellaneous Total \begin{tabular}{|} \\ \\ \\ \hline \end{tabular} Total budgeted S\&A expenses (9) Cash Budget Cash balance, beginning Add cash receipts: Collections from sales Total cash available Disbursements: Payments for Material purchases Payments for Direct labor costs Payments for Manufacturing overhead Payments for Selling and administrative Payments for Equipment purchase Payments for Dividends Total Disbursements Excess (Deficiency)* negative amount in ( ) Financing: Bank loan Borrowing (repayment)* * negative amount in ( ) Cash before interest payment Interest payment Cash balance, ending (10) Budgeted Income Statement, for 1st Quarter of Year 1 Qtr Sales Less: Cost of goods sold Gross margin Less: Selling and admin. expenses Net oneratinn income LIABILITIES \& STOCKHOLDERS' EQUITY Liabilities Accounts Payable Long-term Note Bank Loan Stockholders' Equity Common Stock Retained Earnings Total Liabilities and Equity Net operating income Less: Interest expenses Net income (11) Balance Sheet, as of March 31, Year 1 ASSETS Current Assets Cash Accounts Receivable Raw Materials Inventory Finished Goods Inventory Prepaid Insurance Property, Plant and Equipment Plant and Equipment Less: Accumulated Depreciation Total Assets