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Project CMRNA is a small-scale contract producer and seller of drugs and vaccines for clinical trials. The master budget will detail each quarter's activity and the activity for the year in total. CMRNA will base the 2021 budget on the following information: 1. Expected sales, in units, for the four quarters of 2021 and the first two quarters of 2022 are as follows: 2021 Q1 2,800 2021 Q2 15,000 2021 Q3 26,000 2021 24 35,000 2022 01 40,000 2022 Q2 43,000 The selling price for 2021 has been set at $40.00 per unit. CMRNA's fiscal year ends on December 31.All sales are on account. 80% of sales on account are collected in the quarter of sale; 20% of sales on account are collected in the following quarter. Assume that all the balance in accounts receivable (as of 319 December, 2020) will be collected in the first quarter of 2021. Assume no bad debts are incurred. 2. Each component requires the following direct inputs: 4 micrograms (meg) of direct material available at a price of $1.00 per meg. 0.002 hours of direct labour at a rate of $40.00 per hour. CMRNA has a policy of maintaining direct material ending inventory equal to 10% of direct materials needed for the next quarter's production requirements. All raw materials are purchased on account. 50% of a quarter's purchases are paid for in the quarter of purchase; the remaining in the following quarter. CMRNA has a policy of keeping ending finished goods inventory equal to 10% of next quarter's forecasted sales. There is no beginning or ending work-in-process inventory. Direct labourers are paid at the end of each month. 3. Total budgeted variable overhead costs for the 2021 year (at a level of sales estimated in Item 1 above) follow: Indirect materials $26,986 Indirect labour 55,520 Employee benefits 83,280 Inspections 31,500 Utilities 41.640 Total $238,926 5. Variable selling and administration expenses include commissions and other administrative expenses. Commissions are budgeted at 5% of sales dollars for the quarter. 80% of these commissions are paid in the quarter they incurred, while 20% are paid in the following quarter. Other variable administration costs are $2.00 per unit. These costs are paid for in the quarter they incurred. Annual fixed selling and administration expenses are as follows: Sales salaries $152,000 Administration salaries 100,000 Travel 24,000 Insurance 3,400 Utilities 2,800 Depreciation 12,000 Other 2800 Total $297,000 Fixed selling and administration expenses are paid evenly over the four quarters of the year. 6. CMRNA makes quarterly income tax installments based on the projected taxable income for the year. The company is subject to a 30% tax rate. For the master budget, CMRNA assumes tax expenses incurring for the year 2021 are paid in cash evenly over the four quarters of the year 2021. 7. CMRNA plans the following financing and investing activities for the coming year: The company is planning to buy a piece of land, costing $70,000, in the last quarter of 2021. This piece of land will be held for future plant expansion. The company will pay cash for the land and will finance any resulting cash shortfall by drawing on its operating line of credit. The company has an operating line of credit established with its bank. This allows the company to borrow in multiples of $5,000 to cover any cash shortfalls. All borrowing is assumed to occur at the beginning of the quarter in which the funds are required and all repayment is assumed to be made at the end of the quarter in which funds are available for repayment. Simple interest at the rate of 10% per annum is paid on a quarterly basis on all outstanding short-term loans. All repayments are in multiples of $1,000. The company currently has $240,000 in an outstanding long-term loan with an annual interest rate of 12% and makes quarterly interest only payments at the end of each quarter. The loan is due in 2033. The company outsources some of the manufacturing for $500,000. The company pays the outsourcing fee in cash at the end of the first quarter of year 2021. 1. Prepare a master budget for CMRNA for each quarter of 2021 and for the year in total. The following component budgets must be included: a. Beginning balance sheet (classified as in Item 8, Project) b. Sales budget c. Schedule of receipts d. Production budget e. Direct materials purchases budget f. Schedule of disbursements for materials g. Direct labour budget h. Overhead budget (be sure to show disbursements for variable and fixed overheads, in addition to applied variable and fixed overhead expenses). i. Selling and administrative budget (be sure to show disbursements for selling and administrative expenses). j. Cash budget Prepare the following for the year, 2021, in total, k. Cost of goods manufactured budget 1. Cost of goods sold budget m. Pro forma income statement (using absorption costing) n. Pro forma classified balance sheet Project CMRNA is a small-scale contract producer and seller of drugs and vaccines for clinical trials. The master budget will detail each quarter's activity and the activity for the year in total. CMRNA will base the 2021 budget on the following information: 1. Expected sales, in units, for the four quarters of 2021 and the first two quarters of 2022 are as follows: 2021 Q1 2,800 2021 Q2 15,000 2021 Q3 26,000 2021 24 35,000 2022 01 40,000 2022 Q2 43,000 The selling price for 2021 has been set at $40.00 per unit. CMRNA's fiscal year ends on December 31.All sales are on account. 80% of sales on account are collected in the quarter of sale; 20% of sales on account are collected in the following quarter. Assume that all the balance in accounts receivable (as of 319 December, 2020) will be collected in the first quarter of 2021. Assume no bad debts are incurred. 2. Each component requires the following direct inputs: 4 micrograms (meg) of direct material available at a price of $1.00 per meg. 0.002 hours of direct labour at a rate of $40.00 per hour. CMRNA has a policy of maintaining direct material ending inventory equal to 10% of direct materials needed for the next quarter's production requirements. All raw materials are purchased on account. 50% of a quarter's purchases are paid for in the quarter of purchase; the remaining in the following quarter. CMRNA has a policy of keeping ending finished goods inventory equal to 10% of next quarter's forecasted sales. There is no beginning or ending work-in-process inventory. Direct labourers are paid at the end of each month. 3. Total budgeted variable overhead costs for the 2021 year (at a level of sales estimated in Item 1 above) follow: Indirect materials $26,986 Indirect labour 55,520 Employee benefits 83,280 Inspections 31,500 Utilities 41.640 Total $238,926 5. Variable selling and administration expenses include commissions and other administrative expenses. Commissions are budgeted at 5% of sales dollars for the quarter. 80% of these commissions are paid in the quarter they incurred, while 20% are paid in the following quarter. Other variable administration costs are $2.00 per unit. These costs are paid for in the quarter they incurred. Annual fixed selling and administration expenses are as follows: Sales salaries $152,000 Administration salaries 100,000 Travel 24,000 Insurance 3,400 Utilities 2,800 Depreciation 12,000 Other 2800 Total $297,000 Fixed selling and administration expenses are paid evenly over the four quarters of the year. 6. CMRNA makes quarterly income tax installments based on the projected taxable income for the year. The company is subject to a 30% tax rate. For the master budget, CMRNA assumes tax expenses incurring for the year 2021 are paid in cash evenly over the four quarters of the year 2021. 7. CMRNA plans the following financing and investing activities for the coming year: The company is planning to buy a piece of land, costing $70,000, in the last quarter of 2021. This piece of land will be held for future plant expansion. The company will pay cash for the land and will finance any resulting cash shortfall by drawing on its operating line of credit. The company has an operating line of credit established with its bank. This allows the company to borrow in multiples of $5,000 to cover any cash shortfalls. All borrowing is assumed to occur at the beginning of the quarter in which the funds are required and all repayment is assumed to be made at the end of the quarter in which funds are available for repayment. Simple interest at the rate of 10% per annum is paid on a quarterly basis on all outstanding short-term loans. All repayments are in multiples of $1,000. The company currently has $240,000 in an outstanding long-term loan with an annual interest rate of 12% and makes quarterly interest only payments at the end of each quarter. The loan is due in 2033. The company outsources some of the manufacturing for $500,000. The company pays the outsourcing fee in cash at the end of the first quarter of year 2021. 1. Prepare a master budget for CMRNA for each quarter of 2021 and for the year in total. The following component budgets must be included: a. Beginning balance sheet (classified as in Item 8, Project) b. Sales budget c. Schedule of receipts d. Production budget e. Direct materials purchases budget f. Schedule of disbursements for materials g. Direct labour budget h. Overhead budget (be sure to show disbursements for variable and fixed overheads, in addition to applied variable and fixed overhead expenses). i. Selling and administrative budget (be sure to show disbursements for selling and administrative expenses). j. Cash budget Prepare the following for the year, 2021, in total, k. Cost of goods manufactured budget 1. Cost of goods sold budget m. Pro forma income statement (using absorption costing) n. Pro forma classified balance sheet