Please do parts E through I. Thanks!
Northern Illinois Manufacturing is preparing its budget for the coming year. The first step is to plan for the first quarter of that coming year. Northern Illinois gathered the following information from its managers. Sales: Actual unit sates for November 113,500 Actual unit sales for December 103,100 Expected unit sales for January 114,000 Expected unit sales for February 113,500 Expected unit sales for March 116,000 Expected unit sales for April 126,000 Expected unit sales for May 138,500 Unit selling price $12 Northern Illinois wants to keep 10% of the next month's unit sales in ending inventory. All sales are on account. 85% of the Accounts Receivable are collected in the month of sale and 15% of the Accounts Receivable are collected in the month after sale. Accounts receivable on December 31 totaled 183,780. Direct Materials: The product uses metal, plastic, and rubber. In total, each unit requires 2 pounds of material at an average cost of 0.75 per pound. Northern Illinois likes to keep 5% of the materials needed for the next month in its ending inventory. Payment for materials is made within 15 days. 50% is paid in the month of purchase and 50% is paid in the month after purchase. Accounts Payable on December 31 totaled $120,595. Raw materials on December 31 totaled 11,295 pounds. Direct Labor: Labor requires 12 minutes per unit for completion and is paid at a rate of $18 per hour. Manufacturing Overhead: Indirect materials Indirect labor Utilities Maintenance Salaries Depreciation Property taxes Insurance Janitorial 30 cents per labor hour 50 cents per labor hour 45 cents per labor hour 25 cents per labor hour $52,000 per month $16,800 per month $2,675 per month $2,200 per month $1,800 per month Selling and Administrative Expenses: Variable selling and administrative cost per unit is $2.40. Fixed selling and administrative costs per month are: Advertising Insurance Salaries Depreciation Other fixed costs $15,000 per month $1,400 per month $72,000 per month $2,500 per month $3,000 per month Other Information: The cash balance on December 31 totaled $220,500, but management has decided that it wants to maintain a cash balance of at least $750,000 beginning January 31. Dividends are paid each month at the rate of $2.50 per share for 5,000 shares outstanding. The company has an open line of credit with the First National Bank. The terms of the agreement requires borrowing to be in $1,000 increments at 8% interest. Northern Illinois borrows on the first day of the month and repays on the last day of the month. Reserve repayment, if required, until Northern Illinois can pay the entire amount. A $250,000 equipment purchase is planned for February Instructions (Do all parts): Note: All budgets and schedules should be prepared by month for the first quarter (January, February, and March). Round all figures to the nearest dollar. For labor hours round to whole hours. a. Prepare a sales budget. b. Prepare a production budget. c. Prepare a direct materials budget. d. Prepare a direct labor budget. e. Prepare a manufacturing overhead budget. f. Prepare a selling and administrative budget. g. Prepare a schedule for expected cash collections from customers. h. Prepare a schedule for expected payments for materials purchases. . Prepare a cash budget. Mar 116000 Requirement B: Production Budget Particulars Jan Sales in Number of units 114000 Opening Inventory 11400 Closing Inventory 13500 To be Produced units 116100 Feb 135000 13500 11600 133100 11600 12600 117000
