Q 1 Cash Budget and Budgeted Income Statement

Maple Leaf Supply Company buys and sells a product line with an average selling price of $20 per unit. All sales are on credit, with a 2 percent discount available to customers who pay their accounts by the end of the month of purchase. On average, 80 percent of the customers pay within the discount period, 4 percent never pay their account, and the others pay during the month following the sale. The accountant recognizes the estimated bad debts at the end of each month. Purchases of the product occur evenly throughout the month at an average price of $9 per unit. The targeted ending inventory is 200 units. All purchases are on account, due within 10 days after the purchase, with no discounts. As a result, two-thirds of the purchases are paid during the month in which the purchase occurred and one-third during the following month. Other information: 1. Rent and utilities of $1,200 are paid on the 20th of each month, and employee salaries of $6,700 are paid on the 28th of each month. 2. Office supplies are purchased in January, April, July, and October for use in each quarter. The quarterly outlays have been $4,200. 3. Office equipment, with an expected five-year life was purchased at the beginning of 2024. Its net book value is currently $9,350. The company uses straight-line amortization. 4. Monthly sales in units were as follows:

Estimated Actual December 2025 1,300 1,400 January 2026 1,600 1,400 February 2026 1,200 1,200 March 2006 850 -- April 2026 900 --

The cash balance on March 1, 2026, is $2,350. The company has a good credit rating, and it can borrow to cover short-term cash needs.

Required: 1. Prepare a schedule of budgeted cash receipts and disbursements for March 2026. Will the company need a loan if the company wants to have a minimum cash on hand of 25 000 at the end of March. Assume interest on the loan, if needed is only paid in April ? 2. Prepare a budgeted income statement for March 2026.

Prepare in good format.

Q 2 Make or Buy and Qualitative Considerations

Hetrick Dentistry Services operates in a large metropolitan area. Currently, Hetrick has its own dental laboratory to produce porcelain and gold crowns. The unit costs to produce the crowns are as follows: Porcelain Gold Raw materials $ 70 $ 130 Direct labour 27 27 Variable overhead 8 8 Fixed overhead 22 22 Total $127 $187 Fixed overhead is detailed as follows: Salary (supervisor) $26,000 Depreciation 5,000 Rent (lab facility) 32,000

Overhead is applied on the basis of direct labour hours. These rates were computed by using 5,500 direct labour hours. A local dental laboratory has offered to supply Hetrick all the crowns it needs. Its price is $125 for porcelain crowns and $150 for gold crowns; however, the offer is conditional on supplying both types of crowns- it will not supply just one type for the price indicated. If the offer is accepted, the equipment used by Hetrick's laboratory would be scrapped (it is old and has no market value), and the lab facility would be closed. Hetrick uses 2,000 porcelain crowns and 600 gold crowns per year.

Required: 1. Should Hetrick continue to make its own crowns, or should they be purchased from the external supplier? Show proper schedules 2. What qualitative factors should Hetrick consider in making this decision? 3. Suppose that the lab facility is owned rather than rented and that the $32,000 is depreciation rather than rent. What effect does this have on the analysis in Requirement 1? 4. Refer to the original data. Assume that the volume of crowns used is 3,400 porcelain and 600 gold. Should Hetrick make or buy the crowns? Explain the outcome Show clearly how you derived the decisions. Use table formats not equations