Pedro's Pizza makes frozen pizza dough. The company just finished its first year of operation (12 months, Jan-Dec). The following is its traditional income statement and Balance Sheet Sales (15,000 units) CGS Gross Profit $ 300,000 180,000 $ 120,000 Sales Commissions Salaries Depreciation expense Net Income $30,000 30,000 6,000 $54.000 AP $3,000 7,000 Credit Line Cash $5,000 AR 5.000 Inventory- Raw Mat 9,000 Inventory - Finished Tsoods 3,000 Equipment 60,000 Acc Depreciation 6,000) Total Assets S76.000 Common Stock 12,000 Retained Earn 54.000 Total L & Eq $76.000 VCP wants to prepare a cash budget for the first 3 months of the next year. Use the following estimates: The quantity sold is projected to increase 4% for the year. Price will increase 5%. Sales are spread evenly throughout the year. CGS should be calculated on a FIFO basis. 25% of sales is collected in the month of sale; the remainder is collected the next month. Inventory Last year's Finished Goods and Cost of Goods Sold had a constant cost o per unit. o All raw materials is purchased on credit ($1.50 per lb) and is the same price as last year. Each product requires 2.5 lbs). Ending inventory for both should be 40% of next month's activity (activity is constant). Beginning and ending WIP is zero 20% of purchases are paid in the month of purchase, 80% in the following. All other expenses are paid with cash. Direct Labor is 0.2 hours per product at $30 per hour. Variable Overhead is $2.25 per product. Fixed Overhead is zero. The credit line is used for cash shortfalls. Excess cash will pay down this line. Interest is 1% per month of last month's balance. Projections are to buy $6000 of new equipment at the end of January. Equipment is depreciated straight-line to zero salvage over 5 years. All of this is used in administration. Sales commission rate will remain the same. Salaries will increase by 4%. VCP wants to maintain a minimum cash balance of at least $5,000. Excess to repay credit line. a. Sales A/R Collections (10 points) Jan Feb Mar New Price Sales (units) Sales (S) AR Beg Bal Sales (Ss) Collections AR End Balance b. Finished Goods/Production (Patties) (10 points) Jan Feb Mar Beginning Unit Cost Beg Inv (units) Sales (units) Req ending Bal (units) Production (units) Actual Ending Finished goods Balance (units) c. DM/RM (Beef) Inventory/Purchases (10 points) Jan Feb Mar Beginning Raw materials (units) Needed for Production (units) Minimum Required Inventory_(units) Purchases (units) Purchases ($) Actual Ending Inventory Balance (units) Ending Balance (S) Feb Mar d. Capital Purchases (10 points) Jan Capital Purchases Equip Balance Depreciation Acc. Depreciation Feb Mar e. Cost of Goods Manufactured (10 points) Jan DM used (units) DM used ($) DL