Ponderosa, Inc., produces wiring harness assemblies used in the production of semi-trailer trucks. The wiring harness assemblies are sold to various truck manufacturers around the world. Projected sales in units for the coming five months are given below.

January	10,000
February	10,500
March	13,000
April	16,000
May	18,500

The following data pertain to production policies and manufacturing specifications followed by Ponderosa:

Finished goods inventory on January 1 is 900 units. The desired ending inventory for each month is 20 percent of the next month's sales.

The data on materials used are as follows:

Direct Material	Per-Unit Usage	Unit Cost
Part #K298	2	$4
Part #C30	3	7

Inventory policy dictates that sufficient materials be on hand at the beginning of the month to satisfy 30 percent of the next month's production needs. This is exactly the amount of material on hand on January 1.

The direct labor used per unit of output is one and one-half hours. The average direct labor cost per hour is $20.

Overhead each month is estimated using a flexible budget formula. (Activity is measured in direct labor hours.)

	Fixed Cost Component	Variable Cost Component
Supplies	$	$1.00
Power		0.20
Maintenance	12,500	1.10
Supervision	14,000
Depreciation	45,000
Taxes	4,300
Other	86,000	1.60

Monthly selling and administrative expenses are also estimated using a flexible budgeting formula. (Activity is measured in units sold.)

	Fixed Costs	Variable Costs
Salaries	$ 88,500
Commissions		$1.40
Depreciation	25,000
Shipping		3.60
Other	137,000	1.60

The unit selling price of the wiring harness assembly is $110.

In February, the company plans to purchase land for future expansion. The land costs $68,000.

All sales and purchases are for cash. The cash balance on January 1 equals $62,900. The firm wants to have an ending cash balance of at least $25,000. If a cash shortage develops, sufficient cash is borrowed to cover the shortage and provide the desired ending balance. Any cash borrowed must be borrowed in $1,000 increments and is repaid the following month, as is the interest due. The interest rate is 12 percent per annum.

Required:

Prepare a monthly operating budget for the first quarter with the following schedules:

6. Selling and administrative expense budget. Round your answers to the nearest cent, if required.

	January	February	March	Total
Planned sales	fill in the blank	fill in the blank	fill in the blank	fill in the blank
Variable selling & administrative expense per unit	$fill in the blank	$fill in the blank	$fill in the blank	$fill in the blank
Total variable expense	$fill in the blank	$fill in the blank	$fill in the blank	$fill in the blank
Fixed selling & administrative expense:
Salaries	$fill in the blank	$fill in the blank	$fill in the blank	$fill in the blank
Depreciation	fill in the blank	fill in the blank	fill in the blank	fill in the blank
Other	fill in the blank	fill in the blank	fill in the blank	fill in the blank
Total fixed expenses	$fill in the blank	$fill in the blank	$fill in the blank	$fill in the blank
Total selling & administrative expenses	$fill in the blank	$fill in the blank	$fill in the blank	$fill in the blank

Question Content Area

7. Ending finished goods inventory budget. Round intermediate calculations to the nearest cent. Round your answers to the nearest cent, if required.

Unit cost computation:
Direct materials:
Part K298	$fill in the blank
Part C30	fill in the blank
Direct labor	fill in the blank
Overhead:
Variable	fill in the blank
Fixed	fill in the blank
Total unit cost	$fill in the blank
Number of units	fill in the blank
Finished goods	$fill in the blank

Question Content Area

8. Cost of goods sold budget

Direct materials used
Part K298	$fill in the blank
Part C30	fill in the blank	$fill in the blank
Direct labor used		fill in the blank
Overhead		fill in the blank
Budgeted manufacturing costs		$fill in the blank
Add: Beginning finished goods		fill in the blank
Goods available for sale		$fill in the blank
Less: Ending finished goods		fill in the blank
Budgeted cost of goods sold		$fill in the blank

Question Content Area

9. Budgeted income statement (ignore income taxes)

Sales	$fill in the blank
Less: Cost of goods sold	fill in the blank
Gross margin	$fill in the blank
Less: Selling and administrative expense	fill in the blank
Income before income taxes	$fill in the blank

Question Content Area

10. Cash budget Enter a negative balance as a negative amount, and if an amount is zero enter "0".

	January	February	March	Total
Beginning balance	$fill in the blank	$fill in the blank	$fill in the blank	$fill in the blank
Cash receipts	fill in the blank	fill in the blank	fill in the blank	fill in the blank
Total cash available	$fill in the blank	$fill in the blank	$fill in the blank	$fill in the blank
Disbursements:
Purchases	$fill in the blank	$fill in the blank	$fill in the blank	$fill in the blank
DL payroll	fill in the blank	fill in the blank	fill in the blank	fill in the blank
Overhead	fill in the blank	fill in the blank	fill in the blank	fill in the blank
Marketing & admin	fill in the blank	fill in the blank	fill in the blank	fill in the blank
Land		fill in the blank		fill in the blank
Total disbursements	$fill in the blank	$fill in the blank	$fill in the blank	$fill in the blank
Ending balance	$fill in the blank	$fill in the blank	$fill in the blank	$fill in the blank
Financing:
Borrowed/repaid	fill in the blank	fill in the blank	fill in the blank	fill in the blank
Interest paid	fill in the blank	fill in the blank	fill in the blank 5	fill in the blank
Ending cash balance