Please explain how the numbers in the Direct Materials Budget and Cash Collections Budget were found (what are the calculations?).

D E F G . 1 J L . N 1 The Master Budget Comprehensive summary problem 2 3 5 6 9 11 12 13 Birdfeeders Unlimited makes backyard birdfeeders. The company sells the birdfeeders to home 4 improvement stores. $15 Sales price per birdfeeder 1.5 Board feet of wood required for each birdfeeder 7 $4 Cost per board foot (actual) 8 10% Desired ending wood inventory stated as a percentage of next month's production requirements 20% Desired ending finished goods inventory (finished birdfeeders) stated as a percentage of next month's sales 10 $550,000 Total cost of direct materials purchases in December 45% of direct materials purchases are paid in the month of purchase 55% of direct materials purchases are paid in the month after purchase 14 15 Sales data for the company can be found on the "SALESDATA" tab. 16 17 Use the blue shaded areas on the ENTERANSWERS tab for inputs. Always use cell references and formulas where appropriate to receive full credit. If you copy/paste from 18 the Instructions tab you will be marked wrong. 19 20 Requirements 1 Prepare the sales budget, including a separate section that details the type of sales made (cash versus 21 credit) for the first three months of the year, as well as a summary budget for the quarter. 2 Prepare the production budget for the first three months of the year, as well as a summary budget for 22 the quarter. Enter all amounts as positive values. Do NOT use parentheses or a minus sign for amounts to be subtracted. 3 Prepare the direct materials purchases budget for the first three months of the year, as well as a summary budget for the quarter. Assume the company needs 120,000 board feet of wood for production in April. Enter all amounts as positive values. Do NOT use parentheses or a minus sign for amounts to be 25 subtracted. 26 b. Abbreviation used: DM = Direct materials 4 Prepare the cash collections budget for January, February, and March, as well as a summary for the first 27 quarter. 5 Prepare the cash payments budget for direct materials purchases for the months of January, February, 28 and March, as well as a summary for the first quarter. 29 a. 23 24 a. A B D E TI G . 1 **DATA SHEET -- DO NOT ENTER ANSWERS HERE** 2 3 Units 4 October actual sales (prior year) 92,000 5 November actual sales (prior year) 85,000 6 December actual sales (prior year) 78,000 7 January projected sales 80,000 8 February projected sales 90,000 9 March projected sales 95,000 10 April projected sales 105,000 11 12 20% of the total sales are cash sales 13 14 The company's collection history indicates that: 15 80% of credit sales is collected in the month after the sale 16 10% is collected two months after the sale 17 6% is collected three months after the sale 18 4% is never collected 19 80% of the total sales are credit sales 20 Projected Sales in Units (A) Unit Price (B) Projected Sales (AEB) Cash Sales (20% of total projected sales) Credit Sales (80% of total projected sales) Sales Budget January February 80000 90000 15 15 1200000 1350000 240000 270000 960000 1080000 March 95000 15 1425000 285000 1140000 1st Quarter 265000 15 3975000 795000 3180000 October 92000 15 1380000 276000 1104000 Previous Year Sales November 85000 15 1275000 255000 1020000 December 78000 15 1170000 234000 936000 Birdfeeders Unlimited Cash Collections Budget For the Quarter ended March 31 February March 270000 285000 January 240000 1st Quarter 795000 Note Cash sales 864000 Cash Sales in current month Collection on credit sales Credit Sales made one month ago Credit Sales made two months ago Credit Sales made three months ago Total Cash Collections 96000 748800 102000 662400 748800 768000 93600 612000 768000 2380800 291600 1836000 2380800 80% of credit sales made 1 month 10% of credit sales made 2 months 6% of credit sales made 3 month 561600 864000 Projected Sales in Units Add: Desired Ending Inventory Total Units Needed Less: Opening Inventory Total Units to be produced Production Budget January February 80000 90000 18000 19000 98000 109000 16000 18000 82000 91000 March 95000 21000 116000 19000 1st Quarter 265000 21000 286000 December 78000 16000 94000 15600 16000 97000 270000 78400 April 82000 120000 Direct Material Purchases Budget January February Total Units (birdfeeders) to be Produced (C) 91000 Multiply by: Quantity (board feet) of DM needed Per Unit (D) 1.5 1.5 Quantity (board feet) needed for Production (CD) 123000 136500 Add: Desired Ending Inventory 13650 14550 Total Quantity (board feet) needed 136650 151050 Less: Opening Inventory 12300 13650 Total Material to be purchased (E) 124350 137400 Cost Per board foot (F) 4 4 Total Cost of Direct Materials Purchases 497400 549600 March 97000 1.5 145500 12000 157500 14550 142950 4 571800 1st Quarter 270000 1.5 405000 12000 417000 12300 404700 4 1618800