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.

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

1. Finished goods inventory on January 1 is 900 units. The desired ending inventory for each month is 20 percent of the next months sales.
2. The data on materials used are as follows:

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

1. The direct labor used per unit of output is one and one-half hours. The average direct labor cost per hour is $20.
2. Overhead each month is estimated using a flexible budget formula. (Activity is measured in direct labor hours.)
3. Monthly selling and administrative expenses are also estimated using a flexible budgeting formula. (Activity is measured in units sold.)
4. The unit selling price of the wiring harness assembly is $110.
5. In February, the company plans to purchase land for future expansion. The land costs $68,000.
6. Allsalesandpurchasesareforcash.ThecashbalanceonJanuary1equals$62,900.Thefirmwantstohaveanendingcashbalanceofatleast$25,000.Ifacashshortagedevelops,sufficientcashisborrowedtocovertheshortageandprovidethedesiredendingbalance.Anycashborrowedmustbeborrowedin$1,000incrementsandisrepaidthefollowingmonth,asistheinterestdue.Theinterestrateis12percentperannum.Prepareamonthlyoperatingbudgetforthefirstquarterwiththefollowingschedules:
7. 1.Salesbudget
8. 2.PRODUCTIONBUDGET
9. 3.Directmaterialspurchasebudget
10. 4.DirectLaborbudget
11. 5.Overheadbudget
12. 6.Sellingandadministrativeexpensebudget
13. 7.endingfinishedgoodsinventorybudget
14. 8.Costsofgoodssoldbudget
15. 9.budgetedincomestatement
16. 10.Cashbudgetenteranegativebalanceasanegativeamount