Protect A case corporation (PAC) is a newly established, small privately held retail business that sells standard phone case at a competitive price. You are hired as the company's financial analyst intern to assist with company planning to replace Jane who is going on maternity leave. How would I create a master budget for the upcoming fiscal year 2021 and how would I determine the financial viability of the organization going forward. Since the beginning, PAC has struggled to become profitable and consequently has failed to add shareholder value. However for the upcoming 4 quarters, management projects that unit sales of standard cases will grow by 13% over each of the previous quarters due to the positive reception of its revisited standard product in the market place. Quarter 1 2022 sales are expected to be the same as quarter 4 sales in 2021. The base for the sales increase in quarter 1, 2021 are unit sales in quarter 4 of the prior year. In addition management believes it has the capability to raise the price of the standard product by 5% for the entire 2021 year (over what it was In quarter 4, 2022). Management is optimistic the increase in sales price and quantity will allow the company to turn the corner and become profitable. The last bit of good news you discover is that the wholesale cost of the standard product is anticipated to remain the same as in the final quarter of 2020. Management has signaled their intention to remodel the interior of their store in the first quarter of the upcoming year. The remodel is estimated to cost $22,000 and must be paid when the services are completed. The additional depreciation associated with this renovation is $2,200 per quarter beginning in quarter 2. Management is concerned about the cash flow generation. The bank will not increase the company's credit line above its current amount and the shareholders are not prepared to inject new capital into the business. Borrowings on the line of credit are assumed to occur on the first day of the Quarter. On the other hand any payments made on the line of credit are assumed to occur on the last day of the quarter. The bank has a policy that any accumulated interest must be paid off at the start of the next quarter. I.e. you must pay off last quarters accumulated interest expense on day 1 of the current quarter.

Using this information, how would I make a sales budget, case collections budget, inventory purchase budget, cash payments for inventory purchases, ending inventory budget, operating expense budget, cash budget, budgeted contribution margin format income, budgeted balance sheet, budgeted statement of cash flows.

Selling and Administration expenses

Variable Costs:

Sales commission. (% of sales). 6%

Shipping and handling (per unit) 5

Fixed Costs:

Advertising 5,000

Employee Salaries. 30,000

Management Salaries 25,000

Insurance. 2,000

Property Tax. 2,000

Depreciation. 10,000

Utilities. 4,000

Collection Information

% of Sales paid with cash 40%

% of sales on credit. 60%

Percentage of credit sales collected in:

Current quarter. 40%

Following Quarter. 35%

Second following quarter. 23%

Uncollectible portion. 2%

Merchandise Purchasing Information

Percentage of purchases paid in:

Current quarter. 80%

Following quarter. 20%

Desired Ending inventory goal (% of the following quarters expected unit sales) 30%

units in December 31, 2020 ending inventory:

Standard product. 740 units

Premium product. 0 units

Investment & Financing information

Line of Credit (LOC) information

Maximum line of credit. 70,000

Annual interest rate on LOC. 8%

Purchase of assets - renovations (quarter 1) 22,000

dividends paid each quarter. 4,500

required minimum cash balance. 5,000

Tax Information

income tax rate 18%