plus Quarter Column

Plus Quarter Column

Monthly Fixed Selling and Administrative Costs Depreciation $5,000 Salaries of sales personnel 33,255 Advertising 12,000 Management salaries 24,000 Total costs $74,255 4. The company requires ending finished goods inventory to equal 15% of the following month's budgeted sales, in units. On December 31, 8,200 candles were on hand. 5. Ten ounces of raw materials are required to create each finished candle. The company wants to have raw materials on hand at the end of each month equal to 20% of the following month's production needs. On December 31, 109,000 ounces of materials were on hand. 6. The raw materials used in production cost $2.00 per ounce. Eighty percent of the month's purchases are paid for in the month of purchase; the rest is paid in the following month. No discount is available. 7. The standard labor allowed for one candle is 18 minutes. The current direct labor rate is $16 per hour. . 8. On March 1, the company plans to spend $72,000 to replace its office equipment that is fully depreciated. The new equipment is expected to have a ten-year life, with no residual value. 9. The budgeted monthly variable and fixed overhead are as follows. Variable overhead is based on the number of units produced. The fixed overhead budget is based on an annual production of 600,000 candles. Monthly Fixed Overhead Variable Cost/Unit Depreciation $ 15,000 Indirect materials 33,000 $0.20 Indirect labor 86,000 0.40 Utilities 27,000 0.20 Property taxes 16,000 Maintenance 35,500 0.40 Total costs $212,500 $1.20 10. MAK must maintain a minimum cash balance of $100,000. An open line of credit at a local bank allows the company to borrow up to $200,000 per quarter in $1,000 increments. All borrowing is done at the beginning of the month, and all repayments are made at the end of a month in $1,000 increments. Accrued interest is paid only when the principal is repaid. The interest rate is 6% per year. A quarterly dividend of $60,000 will be declared and paid in January. 11. 12. 13. Income taxes payable for the first quarter will be paid on January 15. MAK's tax rate is 35%. 14. The December 31 balance sheet is as follows: December 31 Cash $ 105,000 Accounts receivable 420,000 Raw materials inventory 218,000 Finished goods inventory 248,050 Plant & equipment 640,000 Accumulated depreciation (160,000) Total assets $ 1,471,050 Accounts payable $ 243,000 Income taxes payable 76,000 Common stock 245,000 Retained earnings 907,050 Total liabilities and equities $ 1,471,050 (a) Prepare all components of MAK's master budget for the first quarter of the year. (Enter negative amounts using either a negative sign preceding the number eg.-45. Do not leave any answer field blank. Enter for amounts.) Sales Budget January February March Budgeted units sold 55,000 50,000 45,000 Budgeted sales price $ 35 $ 35 $ 35 Budgeted sales revenue $ 1,925,000 $ 1,750,000 $ 1,575,000 Selling and Administrative Expense Budget January February ME $ $ Rent Management Salaries Salaries Depreciation Sales personnel salaries Advertising Sales commissions Bad debts Sales commissions Advertising