Sutton Manufacturing is preparing its master budget for the first quarter of the upcoming year. The following data pertain to Sutton Manufacturing's operations: (Click the icon to view the data.) (Click the icon to view additional data.) Requirements Requirement 1. Prepare a schedule of cash collections for January, February, and March, and for the quarter in total. Sutton Manufacturing Cash Collection Budget Cash sales Credits sales January February March Quarter $ 15,480 S 62,400 17,280 $ 61,920 69.120 17,100 $ 49,860 193,440 77,880 $ 79,200 $ 86,220 $243,300 Total cash collections Requirement 2. Prepare a production budget. (Hint: Unit sales - Sales in dollars / Selling price per unit.) Sutton Manufacturing Production Budget January February March Quarter Unit sales 8,600 9,600 9,500 27,700 1,920 1,900 1,840 1,840 Plus: Desired ending inventory Total needed 10,520 11,500 11,340 29,540 Less: Beginning inventory (1,720) (1,920) (1,900) (1,720) 8,800 9,580 9,440 27,820 Units to produce Requirement 3. Prepare a direct materials budget. (Round your answers to the nearest whole dollar.) Sutton Manufacturing Direct Materials Budget January Units to be produced 8,800 February 9,580 March Quarter 9,440 27,820 2 x kg of DM needed per unit Quantity (kg) needed for production 17,600 19,160 Plus: Desired ending inventory of DM 1,916 1,888 18,880 1,792 55,640 1,792 Total quantity (kg) needed 19,516 21,048 20,672 57,432 Less: Beginning inventory of DM (1,760) (1,916) (1,888) (1,760) Quantity (kg) to purchase 17,756 19.132 18,784 55,672 $ 1.50 $ 1.50 $ 1.50 $ 1.50 x Cost per kg $ 26,634 $ 28,698 $ 28,176 S 83,508 Total cost of DM purchases Requirement 4. Prepare a cash payments budget for the direct material purchases from Requirement 3. (Leave any unused cells blank. Round your answers to the nearest whole dollar.) Sutton Manufacturing Cash Payments for Direct Material Purchases Budget December purchases (from Accounts Payable) $ January purchases February purchases March purchases Total cash payments for DM purchases January February March Quarter 43,600 $ 43,600 3,995 $ 22,639 26,634 4,305 $ 24,393 28,698 4,226 4,226 47,595 $ 26,944 $ 28,619 $ 103,158 Requirement 5. Prepare a cash payments budget for conversion costs. (Round your answers to the nearest whole dollar.) Sutton Manufacturing Cash Payments for Conversion Costs Budget January February March Quarter Variable conversion costs Rent (fixed) $ 9,680 $ 10,538 $ 10,384 $ 30,602 5,500 2,800 Other fixed MOH 5,500 2,800 5,500 2,800 16,500 8,400 55,502 Total payments for conversion costs 17,980 $ 18,838 $ 18,684 $ Requirement 6. Prepare a cash payments budget for operating expenses. (Round your answers to the nearest whole dollar.) Sutton Manufacturing Cash Payments for Operating Expenses Budget January February March Quarter Variable operating expenses $ 10,750 $ 12,000 $ Fixed operating expenses 1,600 1,600 Total payments for operating expenses $ 12,350 $ 13,600 $ 11,875 $ 1,600 13,475 $ 34,625 4,800 39,425 Requirement 7. Prepare a combined cash budget. (Leave any unused cells blank. Use parentheses or a minus sign for negative cash balances and financing payments.) Sutton Manufacturing Cash balance, beginning Add cash collections Combined Cash Budget January February S 4,640 77,880 82,520 Total cash available Less cash payments: Direct material purchases 47,595 Conversion costs 17,980 Operating expenses 12,350 Equipment purchases 5,400 Tax payment 83,325 Total cash payments (805) Excess (deficiency) of cash Financing: Borrowings 6,000 Repayments Interest payments 6,000 Total financing $ 5,195 Cash balance, ending More info a. Actual sales in December were $78,000. Selling price per unit is projected to remain stable at $9 per unit throughout the budget period. Sales for the first 5 months of the upcoming year are budgeted to be as follows: January.... February $ 77,400 $ 86,400 March. $ 85,500 $ 82,800 April..... May..... $ 72,000 b. Sales are 20% cash and 80% credit. All credit sales are collected in the month following the sale. c. Sutton Manufacturing has a policy that states that each month's ending inventory of finished goods should be 20% of the following month's sales (in units). d. Of each month's direct material purchases, 15% are paid for in the month of purchase, while the remainder is paid for in the month following purchase. Two kilograms of direct material is needed per unit at $1.50/kg. Ending inventory of direct materials should be 10% of next month's production needs. e. Monthly manufacturing conversion costs are $5,500 for factory rent, $2,800 for other fixed manufacturing expenses, and $1.10 per unit for variable manufacturing overhead. No depreciation is included in these figures. All expenses are paid in the month in which they are incurred. f. Computer equipment for the administrative offices will be purchased in the upcoming quarter. In January, Sutton Manufacturing will purchase equipment for $5,400 (cash), while February's cash expenditure will be $12,800 and March's cash expenditure will be $15,600. g. Operating expenses are budgeted to be $1.25 per unit sold plus fixed operating expenses of $1,600 per month. All operating expenses are paid in the month in which they are incurred. h. Depreciation on the building and equipment for the general and administrative offices is budgeted to be $4,500 for the entire quarter, which includes depreciation on new acquisitions. i. Sutton Manufacturing has a policy that the ending cash balance in each month must be at least $5,000. It has a line of credit with a local bank. The company can borrow in increments of $1,000 at the beginning of each month, up to a total outstanding loan balance of $125,000. The interest rate on these loans is 1% per month simple interest (not compounded). Sutton Manufacturing pays down on the line of credit balance if it has excess funds at the end of the quarter. The company also pays the accumulated interest at the end of the quarter on the funds borrowed during the quarter. j. The company's income tax rate is projected to be 30% of operating income less interest expense. The company pays $10,000 cash at the end of February in estimated taxes. Print Done - Data table Current Assets as of December 31 (prior year): - Cash $ 4,640 Accounts receivable, net $ 51,000 Inventory $ 15,400 Property, plant, and equipment, net. $ 121,000 Accounts payable... $ 43,600 Capital stock. ... $ 126,000 Retained earnings . . $ EA 23,000 Print Done Requirements 1. Prepare a schedule of cash collections for January, February, and March, and for the quarter in total. 2. Prepare a production budget. (Hint: Unit sales = Sales in dollars / Selling price per unit.) 3. Prepare a direct materials budget. 4. Prepare a cash payments budget for the direct material purchases from Requirement 3. 5. Prepare a cash payments budget for conversion costs. 6. Prepare a cash payments budget for operating expenses. 7. Prepare a combined cash budget. 8. Calculate the budgeted manufacturing cost per unit (assume that fixed manufacturing overhead is budgeted to be $0.90 per unit for the year). 9. Prepare a budgeted income statement for the quarter ending March 31. (Hint: Cost of goods sold = Budgeted cost of manufacturing each unit x Number of units sold.) 10. Prepare a partial budgeted balance sheet for March 31. Include Loans Payable and Income Tax Payable. Print Done