Sutton Manufacturing is preparing its master budget for the first quarter of the upcoming year. The following data pertain to Sutton Manufacturing's operations: B (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 January February March Quarter Cash sales $ 15,480 $ 17,280 $ 17,100 $ 49,860 Credits sales 62,400 61,920 69,120 193,440 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 8,600 9,600 1,920 1,900 Unit sales March 9,500 1,840 Quarter 27,700 1,840 Plus: Desired ending inventory Total needed Less: Beginning inventory 10,520 (1,720) 11,500 (1,920) 11,340 (1,900) 29,540 (1,720) 27,820 8,800 Units to produce 9,580 9,440 Requirement 3. Prepare a direct materials budget. (Round your answers to the nearest whole dollar.) Sutton Manufacturing Direct Materials Budget January February March Quarter Units to be produced x kg of DM needed per unit Quantity (kg) needed for production Plus: Desired ending inventory of DM Total quantity (kg) needed Less: Beginning inventory of DM Quantity (kg) to purchase x Cost per kg Total cost of DM purchases Enter any number in the edit fields and then click Check Answer. 10 parts Clear All remaining 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 $ 77,400 February $ 86,400 March $ 85,500 April $ 82,800 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 $1,500 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 Print Done . More Info - January $ 77,400 February $ 86,400 March $ 85,500 April $ 82,800 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 $1,500 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 6 X Data Table 69 $ $ $ Current Assets as of December 31 (prior year): Cash Accounts receivable, net Inventory Property, plant, and equipment, net Accounts payable Capital stock Retained earnings $ $ 4,640 51,000 15,400 121,000 43,600 126,000 23,000 $ GA $ 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