Spaworks Inc. makes hot tubs for residential use. The hot tubs, which consist of a fibreglass finish and proprietary insulation glass, are sold with an all-weather pump and heater unit for $2,750. The company is planning its annual budget for the coming year

ending October 31, 2020, and the controller has provided the following data:

Sales

F2020 15,000 tubs

F2021 November sales: 1,800 tubs; December sales: 1,500 tubs

Selling price per tub: $2,750.00

Materials and labour requirements (per tub)

Direct materials

Insulation 5.0 kg

Fibreglass 10.4 sq. metre (m2)

Pumps 1 unit

Direct labour 8 hours

Inventories

Beginning: Qty Units Cost

Finished goods 550 unit $1,400.00

Direct materials

Insulation 2,195 kg $15.00

Fibreglass 6,500 m2 $12.00

Pumps 550 unit $850.00

Ending finished goods inventory is 25% of next month's sales.

Ending direct materials inventories are 20% of next month's production needs.

Direct materials inventory is expected to change to the following:

Insulation $ 16.00 per kg

Fibreglass $ 13.00 per square metre

Pumps $900.00 per unit Other rates

Direct labour wage rate $22.50 per hour

Variable manufacturing overhead $26.00 per direct labour hour

Variable marketing costs $250 per customer

Number of customers 15,000

Other costs

Fixed manufacturing overhead $319,275

Fixed non-manufacturing costs $1,250,000

Required:

Prepare the following schedules of the master budget for the year ended October 31,

2020. Assume that the company uses first in, first out (FIFO) for inventory costs:

1. Revenue budget
2. Production budget
3. Direct materials usage budget
4. Direct materials purchases budget
5. Direct manufacturing labour budget
6. Manufacturing overhead budget
7. Computation of unit costs of finished goods inventory
8. Budgeted ending inventory

i Budgeted schedule of cost of goods sold i Budgeted income statement

k) A good budget must start with credible data. Both internal and external factors can affect the quality of the data used to develop a budget.

i. Identify two external factors that should be considered when developing this budget.

i. Explain how Spaworks' management team could control the risk of using unreliable data in its operating budgets.