Project Tasks:

Monthly Master Budget Year Ended Dec. 31, 2021

Including:

Sales Budget & Schedule of Cash Receipts

Production Budget

Direct Materials Budget & Schedule of Cash Disbursements

Direct Labour Budget

Manufacturing Overhead Budget

Ending Finished Goods Inventory Budget

Selling and Administrative Expense Budget

Cash Budget

Budgeted Income Statement Year Ended Dec. 31, 2021

Use Absorption Costing

Present Calculations of Cost Of Goods Sold in FULL form

Explain the benefits of preparing a Master Budget to CFO

Especially in the Context of Any Projected Borrowing

Liverpool Gifts LTD. Information:

It is November 2020,

We sell Scousers

We utilize Monthly budgets

Budget Year Jan 2021- Dec2021

Fiscal Year end Dec 31

The sales forecasts for three budget years is estimated as follows:

For the year ended December 31, 2020: 475,000 units at $10.50 each*

For the year ended December 31, 2021: 500,000 units at $10.50 each

For the year ended December 31, 2022: 500,000 units at $10.50 each

January, March, May and June are the slowest months with only 1% of sales

July, August and September each contributing 2%

February is 5% of sales

April accounts for 10%

October 15%

November 20%

December Peak at 40% of sales

Sales Pattern NOT expected to change

ending inventory equal to 30% of the next months sales is required

Must rent additional facility from Sept-Dec @ $32000/month payable at beg of month

GELAC is only Raw Material

Each Scouser Requires 2Kgs of GELAC

GELAC costs $0.95/Kg

Must maintain Inv. Base of GELAC of 40% of following months needs

We pay 30% in the month purchased

35% in the month following

Pay remaining 35% month following that (2 months from purchase)

No Early Payment Discount

Beg. Acct Payable Balance Jan 2021 $195045

Coming from GELAC purchases in Nov 2020 and Dec2020

GELAC purchases in November 2020: $243,010

GELAC purchases in December 2020 $157,130

Employees are paid on per unit bases

Total pay varies based on production, averages $9.75 an hour

Rate includes Employer portion of benefits

All Payroll costs are paid as they are incurred

Each Unit Spends 15 Mins in Production

Manufacturing overhead is based on Volume

Unit Variable Overhead Manufacturing Rate is $1.30

Including: Utilities--$0.60; Indirect Materials--$0.20; Plant maintenance--$0.30; environmental fee--$0.14; and Other--$0.06.

The fixed manufacturing overhead costs for the entire year are as follows:

Training and development $55,200

Property and business taxes$ 42,000

Supervisors salary $135,400

Depreciation on equipment 168,800

Insurance $96,000

Other $120,600

Total $618000

taxes are paid in full on March 30 of each year.

expected payment for 2021 is $42,000.

annual insurance premium is paid at the beginning of December

for the period December 1 to November 30.

should be no charge in the 2021 premium from last year

All other cash-related fixed manufacturing overhead costs are incurred evenly over the year

Are paid as they are incurred

uses the straight line method of depreciation.

Selling and administrative expenses are known to be a mixed cost but unsure how much is fixed

Past 4 years Give us this information:

Lowest level of sales: 375,000 units Total Operating Expenses: $778,710

Highest level of sales: 550,000 units Total Operating Expenses: $1,022,460

These costs are paid in the month in which they occur.

Bad Debts are not included in the above expense accounts

Sales are on a cash and credit basis,

45% collected during the month of sale

35% the following month,

19.5% the month thereafter.

12 of 1% of sales is bad debt (uncollectable)

Sales in November and December 2020 are expected to be $997,500 and $1,995,000 respectively.

Accounts Receivable of $1,281,788 at December 31, 2020,

Will be collected in January and February 2021

During the fiscal year ended December 31, 2021, will be required to make monthly income tax installment payments of $20,000.

Outstanding Income Tax from year ended December 31, 2020 must be paid in July 2021.

Income Tax expense is estimated to be 25% of Net Income

Income Tax for the year ended December 31, 2021, in excess of installment payments, will be paid in July, 2022.

is planning to acquire additional manufacturing equipment for $358,000 cash

40% of this amount is to be paid in February 2021,

the rest, in July 2021.

Manufacturing overhead show above already includes depreciation on equipment

minimum balance of $40,000 in their bank account,

preferred rate of 2% per annum. line of credit

All borrowing happens on the first of the month

Repayment on the last day of the month

all borrowing and repayment to the bank in multiples of 1000

interest must be paid at the end of each month

Interest is calculated on the balance at the beg of the month (including amount borrowed that month)

has a policy of paying dividends at the end of each quarter.

board of directors is planning on continuing their policy

declaring dividends of $100,000 per quarter.

A listing of the estimated balances in the companys ledger accounts as of

December 31, 2020 is given below:

Assets

Cash $ 43,500

Accounts receivable 1,281,788

Inventory-raw materials 3,800

Inventory-finished goods 8,250

Prepaid Insurance $88,000

Long-term assets (net) $724,000

Total assets $2,149,338

Liabilities and Shareholders Equity:

Accounts payable $195,045

Income taxes payable $35,500

Share Capital $1,000,000

Retained Earnings $918,793

Total liabilities and shareholders equity $2,149,338

Liabilities and Shareholders Equity

Accounts payable $195,045

Income taxes payable $35,500

Share Capital $1,000,000

Retained Earnings $918,793

Total liabilities and shareholders equity $2,149,338

*Expected sales for the year ended December 31, 2020 are based on actual sales to date and budgeted sales for the duration of the year.

Feb	5%	May	1%
Mar	1%	Jun	1%
July	2%	Oct	15%
Aug	2%	Nov	20%
Sept	2%	Dec	40%

% of sales by month, in order

Excel, please. Send a link to download answers from Excel if possible. THANK YOU.