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 S54.000 Cash $5,000 5,000 9,000 Inventory - Finished Goods 3,000 60,000 (6.000) S76.000 $3,000 7,000 AP AR Credit Line Inventory - Raw Mat Common Stock 12,000 Retained Earn_54,000 Equipment Acc Depreciation Total Assets Total L & Eg S76.000 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: o Last year's Finished Goods and Cost of Goods Sold had a constant cost per unit. o All raw materials is purchased on credit ($1.50 per Ib) and is the same price as last year. Each product requires 2.5 lbs). o Ending inventory for both should be 40% of next month's activity (activity is constant). o 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 $6000 of new equipment at the end of January. Equipment is depreciated straight-line to zero salvage over 5 years. All of this is used in administration. Sales commission rate will remain the same. Salaries will increase by 4%. a. Sales A/R Collections (10 points) Jan Feb Mar New Price Sales (units) Sales ($s) AR Beg Bal Sales ($s) 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)