Question 4

You have been asked to review the information of Dexter Corp. and prepare elements of the master budget for the year ending December 2013.

Given:

A) Balance Sheet:

Dexter Corp Balance Sheet December 31, 2012
ASSETS	LIABILITIES AND EQUITIES
Current Assets:		Current Liabilities:
Cash.............................................................	$ 76,153	Accounts payable.........................	$ 23,451
Accounts receivable..................................	26,000
Inventory: Direct Materials (1,600 kg @ $5)...........	8,000	Equity:
Finished Goods (4,600 @ $5.818).........	26,764	Contributed capital......................	151,746
	136,917	Retained earnings........................	171,720
Capital Assets:		Total equity..................................	323,466
Manufacturing property & equipment..	320,000
Less: accumulated amortization.............	110,000
	210,000
Total Assets................................................	$ 346,917	Total Liabilities and Equity.........	$ 346,917

B) The units are expected to be sold for $12.50 with the following volumes:

December 2012	22,000
January 2013	23,000
February 2013	23,500
March 2013	40,000
April 2013	42,000
May 2013	40,000

C) Variable manufacturing costs:

	Quantity	Cost	Cost per Unit
Direct materials (DM)	0.4	kg	$ 5.00	per kg	$ 2.00
Direct labour (DL)	0.2	hours	$ 15.00	per hour	$ 3.00
Manufacturing Overhead (MOH) (applied on DLH)	0.2	hours	$ 8.00	per hour	$ 1.60

D) Total fixed manufacturing costs per unit:

Estimated annual fixed manufacturing overhead $ 180,000

Includes annual depreciation of $ 24,000

Applied based on direct labour hours (DLH)

E) Desired minimum inventories:

Direct materials	15%	of next month's production needs
Finished goods	20%	of next month's sales in units

F) Selling & administrative costs:

Variable:

Sales commissions: 4% of sales if sales are > $300,000

2% of sales if sales are < or = $300,000

Fixed:

$30,000 monthly, including amortization of $5,000

G) Collection of sales:

All sales are on account and are expected to be collected 45% in the month of sale and 55% in the month following the sale.

H) Payment of direct material purchases:

All direct material purchases are on account, and payments are:

65% in the month of purchase

35% in the month following the purchase

All other operating expenses are paid in the month incurred (budgeted)

I) Minimum cash balance required is: $30,000

Interest is calculated at an annual rate of: 12%

Required(please show notes to support some calculations):

Note: all shaded cells onall schedules are there 'just in case' you require them to calculate any necessary numbers - you may not need to fill in each shaded box on each schedule.

1. Complete the SALES BUDGET (2 marks)

	Dexter Corp.
	Sales Budget
	For the 3 months ending March 31, 2013
	Dec	Jan	Feb	Mar	Total	Apr	May
Sales in Units
Selling Price/unit
Sales in $