Required: Complete the master budget using the information below. Go back to the bank and get a loan! Budgeted Sales: January 1,200 units

February 1,225 units

March 1,300 units

April 1,350 units

May 1,400 units

Sales Price: Each birdhouse is sold for $70 to retailers on account. Expected Cash Collections: The company typically collects 75% of the Accounts Receivable in the month of sale, 15% in the month following the sale and 10% in the second month following the sale. The January 1 AR balance is estimated to be $50,050 ($35,350 to be collected in January and $14,700 in February). Production: The company desires to keep 10% of the next months sales in ending finished goods inventory, but they expect to start January with only 100 completed houses due to the Christmas rush. Raw Materials: The following raw materials are needed per birdhouse: Lumber: 4 yards per house @ $3.00 per yard Shingles: 50 shingles per house @ $.20 per shingle It is also the desire of the company to keep 25% of next months budgeted inventory of raw materials in stock. Smith estimates the beginning inventory on January 1 to be 800 yards of lumber and 15,000 shingles. Expected Cash Disbursements: The company purchases all raw materials on account and typically pays for 90% in the month of the purchase and the remaining 10% in the following month. The AP balance at January 1 is estimated to be $3,100. Direct Labor: Much of the detail work on the birdhouses is done by hand in order to ensure a high quality product. The company has established the following standards for the direct labor to manufacture one house: 3 hours per house @ $9.00 per hour Manufacturing Overhead: The company estimates the following overhead costs for next year: Variable overhead per direct labor hour $2.00 Fixed overhead per month: Depreciation on factory equipment $ 800 Factory rent 1,100 Factory supervisors salaries 2,000 Insurance on factory 400 SG&A Expenses: The company estimates the following selling and administrative expenses for next year: Variable SG&A expenses per unit $1.50 Fixed SG&A expenses per month: Advertising $ 600 Executive salaries 3,500 Insurance office 150 Property taxes office 100 Depreciation office 1,000 Cash Information: The team wants to maintain a minimum cash balance of $30,000 at all times. The company has established a $100,000 line of credit with a local bank on which borrowing must be made in $1,000 increments. Borrowings are made at the beginning of the month. Any balance on the line of credit is repaid at the end of any month that the cash balance exceeds the minimum amount. Interest is paid at the time of repayment and only on the amount repaid. The interest rate on borrowings is 10%. The cash balance on January 1 is $31,00. The company pays their employees in the month of the work is done (ignore payroll taxes), and also pays for all costs associated with MOH in the month incurred. The company plans to purchase additional factory equipment in February for $32,000 cash. The board of directors has declared a cash dividend of $15,000 to be paid in January. Beginning Balance Sheet for First Quarter 2013:

Birdhouse Unlimited
Balance Sheet
December 31, 2012
Assets
Current assets:
Cash	$ 31,000
Accounts receivable	50,050
Raw materials inventory	5,400
Finished goods inventory	5,843
Total current assets		$92,293
Plant and equipment:
Land	$ 20,000
Buildings and equipment	160,000
Accumulated depreciation	(29,000)
Plant and equipment, net		151,000
Total assets		$243,293
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable		$ 3,100
Stockholders' equity:
Common stock	$125,000
Retained earnings	115,193
Total stockholders' equity		240,193
Total liabilities and stockholders' equity		$243,293

Note: The beginning balance sheet will be used in preparing the budgeted balance sheet for March 31, 2013.