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Construct the sales budget Budgeted unit sales Selling price per unit Total sales July 40,000 $12 $480,000 Quarter 3, 2021 August September 45,000 60,000 $12 $12 $540,000 $720,000 L Total 145,000 $12 $1,740,000 Construct Expected Cash Collections Budget Quarter 3, 2021 August September A/R-30Jun (360,000*.30) 65% Collected in the month of the sale 30%. Collected in the month following the sale $ $ July 108,000 312,000 Total $ 108,000 $1,131,000 $ 351,000 $ 468,000 Total Cash Collections $ 420,000 $ 495,000 $ 630,000 $1,545,000 Construct Production Budget Budgeted Sales Add: Desired Endling Inventory Total Needs Less: Beginning Inventory Required Production 40,000 6,750 46,750 6,000 40,750 Quarter 3, 2021 August September 45,000 60,000 9,000 5,250 54,000 65,250 6,750 9,000 47,250 56,250 Quarter 145,000 21,000 166,000 21,750 144,250 Construct Direct Materials Budget July 40,750 Production Materials per units (lbs.) Production Needs Add: Desired ending inventory Total Needed Less: Beginning Inventory Materials to be purchased Cost per lbs. Materials to be purchased - $ 407,500 47,250 454,750 40,750 414,000 $0.25 $103,500 Quarter 3, 2021 August September 47,250 56,250 10 10 472,500 562,500 56,250 32,750 528,750 595,250 47,250 56,250 481,500 539,000 $0.25 $0.25 $120,375 $134,750 Quarter 144,250 10 1,442,500 136,250 1,578,750 144,250 1,434,500 $0.25 $358,625 Construct Expected Cash Disbursements Budget Quarter 3, 2021 August September A/P-30Jun 55% is paid in the month materials are purchased 45% is paid in the following month July $33,187.50 $56,925.00 Total $33,187.50 $197,243.75 $100,743.75 $66,206.25 $46,575.00 $74,112.50 $54,168.75 Total Cash Disbursements $90,112.50 $112,781.25 $128,281.25 $331,175.00 Construct Direct Labor Budget Quarter 3, 2021 August September July Total or 6 minutes Part of an hour of direct labor to produce odle unit of product 0.1 WTC has a "no layoff" policy so all employees are paid for 40 hours of work each week The hously cate per hour for regular time employees $15 The minimum number of hours to be paid each month 3,000 Units of Production Direct Labor per unit Labor hours required Guaranteed Hours Labor Hours Paid Hourly Rate Total Direct Labor Costs Construct Manufacturing Overhead Budget Quarter 3, 2021 August September uly Total Budgeted DLH Variable MOH rate Variable MOH costs Fixed MOH costs Total MOH costs Manufacturing overhead is applied to units of product based on direct labor houes The viable overhead rate per direct hour $25 Fixed Manufacturing Ovechead per month $75,000 Non-cash costs included in Fixed Manufacturing Overhead $25,000 Predetermined Overhead Rate (POHR) Total MOH costs Less: noncash costs Cash disbursements for MOH Construct Ending Finished Goods Inventory Budget Quarter 3, 2021 Cost Quantity Total Production costs per unit Direct Materials Direct Labor Manufacturing Overhead lbs. lurs. hrs. Product Cost per Unit Budgeted Finished Goods Inventory Ending inventory in units Unit product cost Ending finished goods inventory Construct Selling and Administrative Expense Budget Quarter 3, 2021 August September July Total Budgeted Sales Variable S & A rate Variable expenses Fixed S & A costs Total S & A costs Less: noncash costs Cash S & A Expenses WTC las both fixed and variable selling and aclministrative expenses Rate per unit for Variable Selling and Administrative expenses Fixed Selling and Administrative expenses per month Non-cash costs included in Fixed Selling and Administrative expenses $0.25 $75,000 $15,000 Construct Cash Budget Quarter 3, 2021 August September | July Total Maintain a minimum month end cash balance of $40,000 Maintains a 15% open line of credit for $125,000 Borrowing happens on the first day of the month Repayments are made on the last day of the month Cash dividend paid in August Equipment purchases made in Q3 2021 Equipment purchased with cash in July Equipment purchased with cash in September June 30 ending cash balance was $40,000 $60,000 Beginning Cash Balance Add: Cash collections Total cash available Less: Cash disbursements Materials Direct labor Manufacturing O/H Selling and Admin Equipment purchase Dividend Total disbursements Excess Deficiency) Financing Borrowing Repayments Interest Total financing Ending Cash Balance $55,000 $150,000
