Royal company makes widgets. They are in the process of preparing the budget for the quarter ending June 30th. The president of the company is very concerned about her cash flow. Cash is king. She has asked you to prepare a cash budget as well as a budgeted income statement and budgeted Balance Sheet for her to look at. To help with its cash flow needs, the company maintains a 16% open line of credit ($75,000 maximum) and expects to maintain a $30,000 minimum balance in their bank account. If they need to borrow money, they would borrow it at the start of the month and pay it back at the end of the month. The plan is to purchase new equipment in May and June that will cost $143,000 and $48,300 respectively. The cash balance April 1 is $40,000 and a dividend will be paid of $49,000 in April. You are given the following information: MONTH EXPECTED UNIT SALES SELLING PRICE / UNIT April 20,000 Units $10 / Unit May 50,000 Units $10 / Unit June 30,000 Units $10 / Unit July 25,000 Units $10 / Unit August 15,000 Units $10 / Unit All sales are done on account. The company has been in operations for several years, so they know that on average 70% of A/R is collected in the month it is sold, 25% the month thereafter and 5% is considered Bad Debt. The A/R balance at March 31 is $30,000 and will be collected in full. There is a variable selling and administration expense of $0.50 for every unit sold and fixed Selling and Administration costs of $70,000 per month. Prepare a sales Budget for the quarter ending June 30th How much cash will they collect? A new manager was hired and wants ending inventory to be equal to 20% of the following months budgeted sales units. March 31 had 4,000 units on hand. Prepare a production budget 5KGs of material are needed to make 1 widget and costs $0.40 per KG. Management wants to have enough material on hand at the end of the month to equal 10% of the following months production needs. On March 31, 13,000KG of material is on hand. Company policy is to pay half of the A/P in the current month, with the other half paid the month following. A/P at March 31 is $12,000 Prepare a Direct Materials Budget How much cash will they spend? The employees at Royal are very loyal to the company. The company has a no layoff policy, so the company guarantees at least 40 hours for each work week. They reached an agreement and do not have to pay overtime at 1.5 times their base salary of $10/hr they work any hours over 40 at the $10/hr rate. Each widget requires 0.05 hours of Direct Labour. For the next three months, the workforce will be paid a minimum of 1,500 hours per month. Prepare a Direct Labour Budget How much cash will they spend? Royal has a MOH rate of $1 for every widget that is produced (and is applied to units of production on the basis of direct labour hours). Fixed MOH is $50,000 per month. Amortization includes $20,000 of plant amortization and $10,000 Selling and Administration amortization. There is $50,000 of land but the equipment net book value is unknown (youll need to figure this out). There are $200,000 of common shares and R/E at April 1 was $146,150. Prepare a Manufacturing Overhead Budget How much cash will they spend? Prepare a Finished Goods Inventory Budget Prepare a Selling and Administrative expense budget How much cash will they spend? Prepare a Cash budget Prepare a Budgeted Income Statement Prepare a Budgeted Balance Sheet