Santiago Pants Company produces and sells a single product with budgeted or standard costs as follows:

Inputs Standards

Direct materials

Cotton 3 yards at $3 a yard

Fine Cotton 0.2 yards at $5.00 per yard

Direct labor 0.5 hours at $22.00 per hour

Variable factory overhead

Indirect materials & supplies $ .3 per unit

Materials handling $ . 4 per unit

Other indirect labor $ .1 per unit

Fixed factory overhead $535,500

Non-cash fixed factory overhead is $140,000 (mainly depreciation)

Inventories are as follows:

Beginning Raw Materials:

Cotton 10,000 yards

Fine Cotton 1,000 yards

Ending Raw Materials:

Cotton 7,000 yards

Fine Cotton 400 yards

Beginning Finished Goods 5,000 units @ $120,000 (per management estimate)

Ending Finished Goods 8,000 units (determine cost per unit)

Unit Sales are budgeted as follows:

January 120,000 units

February 150,000 units

The budgeted sales price is $45 per unit. Sales are budgeted as 100% credit sales. Past experience indicates that 20% sales are collected during the month of sale, 75% are collected in the following month, and 5% are uncollectible.

Purchases of materials are all on account. Past experience indicates that we pay 70% of our accounts payable in the month of purchase. The remaining 30% are paid in the following months.

Marketing and administrative expenses are:

Variable marketing costs

Sales commissions $1.50 per unit sold

Other marketing costs $0.75 per unit sold

Fixed marketing costs $350,000

Fixed administrative costs $796,000

Non-cash administrative costs are $84,000 (mainly depreciation).

For the Cash budget, the following transactions will occur:

Cash Balance, Feb. 1 $2,400,000

Dividends paid $ 30,000

Payment of Long-term debt $ 23,000

Purchase of equipment $1,470,000

For the long-term debt, assume this is the principal amount and that there is 6% interest on the debt.

Required:

Prepare a Partial Master Budget in good form for February as follows:

1. Sales budget for February.

2. Cash Collections for February.

3. Production Budget, i.e., units to be produced for February.

4. Direct materials budget (highlighting materials used and materials purchased)

5. Direct labor needed for production for February (including cost).

6. Budgeted factory overhead costs for February.

7. Budgeted Cost of goods sold for February.

8. Selling and Administrative Cost Budget

9. Budgeted Income Statement for February

10. Prepare a cash budget for February as follows:

a. Cash Receipts Schedule

b. Cash Disbursement Schedule

c. Cash Budget