snel Woods at December 31, 2019, Will be 200 fotomoulded kayaks. Production of each kayak requires 54 kg of polyethylene powder and a finishing kit (rope, seat, hardware, etc). Company policy is that the ending inventory of polyethylene powder should be 25% of the Prepare the production budget, direct materials budget, dire labour budget, manufacturing overhead budget, and selling administrative expenses budget for this product line by quarter a larter and in total for 2020. Waterways Continuing Problem (This is a continuation of the Waterways Problem from Chapters 1 through 9.) $ 90,000 Sales Unit sales for February 2021 Unit sales for March 2021 Expected unit sales for April 2021 Expected unit sales for May 2021 Expected unit sales for June 2021 Expected unit sales for July 2021 Expected unit sales for August 2021 102,000 110,000 115,000 120,000 135,000 160,000 WCP.10 Waterways Corporation has recently acquired a small manufacturing operation in British Columbia that produces one of its more popular items. This plant will provide these units for resale in retail hardware stores in British Columbia and Alberta. Because the budget prepared by the plant was incomplete, Jordan Leigh, Waterways' CFO, was sent to B.C. to oversee the plant's budgeting process for the second quarter of 2021. Jordan asked the various managers to collect the following information for preparing the second-quarter budget. $15 Average unit selling price 474 CHAPTER 10 Budgetary Planning Selling and Administrative Based on the experience in the home plant. Jordan has su gested that the B.C. plant keep 10% of the next month's unit Sales Variable selling and administrative expenses per unit are $1.62. $15,000 a month in ending inventory. The plant has contracts with some of the man Advertising $2.500 a month home hardware giants, so all sales are on account: 50% of the Depreciation accounts receivable is collected in the month of sale, and the bal $1,400 a month Insurance ance is collected in the month after sale. This was the same collec- $3,000 a month Other fixed costs tion pattern as the previous year. The new plant has no bad debts. Salaries $72,000 a month Direct Materials Other Information The combined quantity of direct materials (consisting of metal. The cash balance on March 31 will be $100,500, but Waterways has plastic, and rubber) used in each unit is 1. 1 kg. Metal, plastic, and decided it would like to maintain a cash balance of at least $500,000 rubber together amount to $1.50 per kg. Inventory of combined beginning on April 30. The company has an open line of credit with direct materials on March 31 consisted of 12,155 kg. its bank. The terms of the agreement require borrowing to be in $1,000 This plant likes to keep 10% of the materials needed for the increments at 3% interest. Borrowing is considered to be on the first next month in its ending inventory. Fifty percent of the payables is day of the month and repayments and interest payments are on the last paid in the month of purchase, and 50% is paid in the month after day of the month. purchase. In May. $845,000 of new equipment to update operations will Accounts payable on March 31 will total $120,600. be purchased. Three months' insurance is prepaid on the first day of the first month of the quarter. Instructions For the second quarter of 2021 a. Prepare a sales budget. b. Prepare a schedule for expected cash collections from customers. c. Prepare a production budget. d. Prepare a direct materials budget. e. Prepare a schedule for expected payments for materials purchases. f. Prepare a direct labour budget. g. Prepare a manufacturing overhead budget h. Prepare a selling and administrative expenses budget. i. Prepare a cash budget. Include supporting calculations. Direct Labour Labour requires 15 minutes per unit for completion and is paid at an average rate of $18 per hour. Manufacturing Overhead Indirect materials Indirect labour Utilities Maintenance Salaries Depreciation Property taxes Insurance Janitorial $0.30 per labour hour $0.50 per labour hour $0.45 per labour hour $0.25 per labour hour $42.065 per month $16.800 per month $2.400 per month $1,200 per month $2,600 per month moldoniunto