Problem 9-29 Operating Budget, Comprehensive Analysis Hopewell Manufacturing produces dashboards used in the production of automobiles. The dash- board assembly is sold to a nearby automobile manufacturing plant. Projected sales in units for the coming five months follow: January 80,000 February 90,000 March 95,000 April 96,000 May 92,000 The following data pertain to production policies and manufacturing specifications followed by Hopewell Manufacturing: a. Finished goods inventory on January 1 is 38,000 units, each costing $274.69. The desired ending inventory for each month is 75 percent of the next month's sales. b. The data on materials used are as follows: Direct Materials Per-Unit Usage (kilograms) Unit Cost (5) Plastix 12 16 Components 4 9 Inventory policy dictates that sufficient materials be on hand at the beginning of the month to produce 40 percent of that month's estimated sales. This is exactly the amount of materials on hand on January 1. c. The direct labour used per unit of output is two hours. The average direct labour cost per hour is $18.50. d. Overhead each month is estimated using a flexible budget formula. (Note: Activity is measured in direct labour hours.) 0.78 Fixed-Cout Variable-Cost Component (5) Component (5) Supplies 1.20 Power 0.70 Maintenance 50,000 0.30 Supervision 24,000 Depreciation 230,000 Taxes 14,000 Other 90,000 0.60 e Monthly selling and administrative expenses are also estimated using a flexible budgeting formula. (Note: Activity is measured in units sold.) Fixed Costs (5) Variable Costs (5) Salaries 70,000 Commissions Depreciation 45,000 Shipping Other 10,000 0.20 1. The unit selling price of the dashboard subassembly is $298. 8. All sales and purchases are for cash. The cash balance on January 1 is $4,600,000. The firm requires a minimum ending balance of $150,000. If the firm develops a cash shortage by the end of the month, sufficient cash is borrowed to cover the shortage. Any cash borrowed is repaid at the end of the month, as is the interest due (cash borrowed at the end of the month is repaid at the end of the following month). The interest rate is 6 percent per annum. No money is owed at the beginning of January Required: 1. Prepare a monthly operating budget for the first quarter with the following schedules (Note: Assume that there is no change in work-in-process inventories.) a. Sales budget b. Production budget c. Direct materials purchases budget d. Direct labour budget c. Overhead budget f. Selling and administrative expenses budget & Ending finished goods inventory budget h. Cost of goods sold budget i. Budgeted income statement j. Cash budget