Problem $13-66($Algo$)$ Comprehenslve Budget Plan $($LO $13-3,4,5)$

Lone Products manufoctures a popular ketchen utenal. The compony recently exponded, ond the controller believes that it will need to

borrow cash to continue operations. It opened negotations with the local bank for a one$-$month loon of $$46,000$ starting March $1.$ The

bonk would charge Interest st the rate of $0\mathrm{.}5$ percent per month snd requlre the compony to repoy interest and princlpol on March $31.$

ln considering the losn, the bank requested s projected income statement and cash budget for March.

The follawing informstion is svailsble:

The compony budgeted soles at $15,000$ unlts per month in Februsry, April, and Moy and st $12,000$ units in March. The seling price

ls $$63$ per unit.

The compony offers $22$ percent discount for cseh ssles. The compony's experience ls that bod debta overoge $1$ percent of crecit

soles.

The inventory of finlshed goods on Februsry $1$ wes $2,700$ units. The desired finlshed goods inventory at the end of each month

equals $25$ percent of sales anticlpated for the following month. There is no work in process.

The Inventory of row materials on Februsry $1$ was $2,430$ pounds. At the end of esch month, the rew materlals inventory equals no

less than $20$ percent of production requirements for the following month. The compony purchases materials in quantties of $265$

pounds per shipment.

Seling expenses are $6$ percent of gross soles. Adm'nlatrative expenses, which include depreclation of $$900$ per month on office

furniture and foctures, total $$70,200$ per month.

The manufacturing budget for the utensil, bssed on normsl production of $14,000$ units per month, follows.

Naterials $(8$ pound por utensil, $7,$ eea pounds, $$30$ per pound$)$

Labor

Varlable overtead

Flived owithad $($Includos depreciation of $$26,660)$

Total

Required:

a$-1.$ Prepore schedules computing imventory budgets by months for production in units for Februsry, March, snd April.

a$-2$ Prepare schedules computing Inventory budgets by months for row materisls purchases In pounds for Februsry and March.

b$.$ Prepsre s projected Income statement for March. Cost of goods sold should equsl the varlable manufacturing cost per unit times

the number of un'ts sold plus the total fixed manufacturing cost budgeted for the perlod. Assume that $40$ percent of sales sere cash

solea.

Complete this question by entering your answers in the tabs below.

Bouguinad A$2$

Prepare a profected income statement for March. Cost of goods sold shauld equal the variable manufocturing coat: per unit

times the number of units sold plus the total fiwed manufacturing cost budgeted for the period. Assume that $40$ perment of

sales are cah sales.

Note: Do not round intermediste calculstians. Found your final answers to nesrest whale dalar.