Tandy, Inc. is in the business of manufacturing mens and womens leather computer bags. On January 1, 2019 they started their new fiscal year. The following is their trial balance as of December 31, 2018:

Account Dr Cr

Cash $ 43,200

Accounts Receivable $ 9,000

Raw Materials Inventory (1) $ 20,240

Work in Process Inv. (2) $ 0

Finished Goods Inv. (3) $ 4,500

Land $ 225,000

Equipment $ 310,000

Vehicles $ 84,200

Accumulated Depreciation $ 55,100

Long-term Investments $ 78,500

Accounts Payable $ 14,700

Wages Payable $ 8,470

Mortgage Payable (4) $ 214,500

Common Stock (5) $ 25,000

APIC $ 125,000

Retained Earnings $ 317,417.50

Includes 450 feet of leather at $4 per foot, 350 feet of nylon lining at $1.25 per foot, and 510 golden buckles at $5 per buckle

No bags are currently in process at the beginning of January

Includes 50 completed bags (manufacturing overhead has been applied)

Monthly payments (interest and principle) are $ 2,500

$0.10 par value, 300,000 share authorized and 250,000 share outstanding

Below is information for the first three months of the fiscal year, 2019.

Sales Forecasts

For this coming year, Tandy has raised their sales price to $ 185 per bag. Based on sales contracts they have signed with their major corporate customers, they anticipate the following sales for the first three months of 2019:

January 250 bags

February 225 bags

March 190 bags

According to the terms of the sales contracts they require each customer to pay 80% of the sales price in the month of sale and 20% in the month following. In December 2018, Tandy had $30,000 in total sales.

The production process

Each bag produced requires 3 feet of leather, 8 feet of nylon, 3 gold buckles, and 2.5 hours of direct labor. Currently they are paying their assembly workers $19 / hour (all wages are paid in the month they are incurred). In order to meet the following months demand, Tandy desires to keep 15% of the next months sales in Finished Goods Inventory. Tandy is forecasting sales in April, 2019 of 285 bags. Additionally, they also keep 30% of next months production needs in raw materials inventory. Tandy anticipates production of 255 units in April, 2019. Tandy has signed contracts with their suppliers to purchase leather at $4 a foot, nylon at $1.25/foot, and buckles at $5 per buckle for the following year. Their policy is to pay for 75% of raw materials at the time of purchase and the remaining 25% in the following month. Tandy incurred $ 8,000 of total materials purchases in December of 2018.

Manufacturing overhead

This company has the following annual costs for manufacturing overhead.

Factory insurance $ 34,500 paid in equal monthly installments

Factory utilities $ 74,000 paid equally over 12 months

Factory depreciation $ 154,000 paid in equal monthly installments

Factory supervisor $ 120,000 paid by salary

Indirect materials $ 42,000 incurred equally over 12 months

Manufacturing overhead is applied based upon direct labor hours. They expected 55,000 of direct labor hours to be worked in 2019.

Selling and Administrative budget

This company has the following annual expenses in their selling and administrative budget. Assume all expenses are paid when they are incurred.

CEO $110,000 paid by salary

Sales salaries $ 75,000 paid by salary

Sales commissions paid at 3% of sales price

Insurance $ 12,500 paid in equal monthly installments

Property Taxes $ 25,250 paid in equal quarterly installments

Utilities $ 12,300 paid in equal monthly installments

Depreciation $ 76,750 straight-line

Other Assumptions

Income tax rate = 25%

Beginning cash (at 01/01/19) = $25,000

Required

Please complete the entire operational budget using Microsoft Excel