The Amazing Building Company (ABC) is in the process of completing their annual budget for 20X1. During November of 20x0, Amanda Brick, President was discussing the company's master budget with her staff. Brick updated the group that she has decided to go ahead and purchase the industrial robot they have been considering. She plans to make the acquisition on January 2 of next year, and expects it will take most of the year to train the personnel and reorganize the production process to take full advantage of the new equipment.

When questioned about funding the purchase, Brick replied as follows: "The robot will cost $1,000,000. We'll finance it with a one-year $1,000,000 loan from National Savings and Loan. I've negotiated a repayment schedule of four equal installments on the last day of each quarter. The interest rate will be 10%, and interest payments will be quarterly as well." Therefore, the outstanding balance for all of Q1 would be $1,000,000 with a $250,000 payment due on the last day of Q1, $750,000 for all of Q2 with a $250,000 payment due on the last day of Q2, etc. and being fully paid off by the end of the year.

ABC is a manufacturer of roof trusses. The firm's two product lines are designated as S (small trusses, 15 feet long) and L (large trusses, 22 feet long). The primary raw material is dimensional lumber. Allowing for normal breakage and scrap lumber, ABC can get either four S trusses or two L trusses out of a crate of lumber. Other raw materials, such as nails and glue, are insignificant in cost and are treated as indirect materials. Jane Bean, ABC's controller, is in charge of preparing the master budget for 20x1. She has gathered the following information:

1. Sales in the fourth quarter of 20x0 are expected to be 60,000 S trusses and 70,000 L trusses. The sales manager predicts that over the next two years, sales in each product line will grow by 5,000 units each quarter over the previous quarter. For example, S truss sales in the first quarter of 20x1 are expected to be 65,000 units.
2. ABC's sales history indicates that 60 percent of all sales are on credit, with the remainder of the sales in cash. The company's collection experience shows that 80 percent of the credit sales are collected during the quarter in which the sale is made, while the remaining 20 percent is collected in the following quarter.
3. The S truss sells for $12, and the L truss sells for $18. These prices are expected to hold constant throughout 20x1.
4. ABC's production manager attempts to end each quarter with enough finished goods inventory in each product line to cover 20 percent of the following quarter's sales. Moreover, an attempt is made to end each quarter with 20 percent of the crates of lumber needed for the following quarter's production, with Q4 20x1 desired ending inventory being 9,400 crates. Since metal strips are purchased locally, ABC buys them on a just-in-time basis; inventory is negligible.
5. All of ABC's direct materials purchases are made on account, and 80 percent of each quarter's purchases are paid in cash during the same quarter as the purchase. The other 20 percent is paid in the next quarter.

1. Projected production costs in 20x1 are as follows:

	S Truss	L Truss
Direct Material:
Crate of lumber:
S: 1/4 crate @ $6 per crate	$1.50
L: 1/2 crate @ $6 per crate		$3.00
Direct Labor:
.2 hour @ $20 per hour	$4.00	$4.00
Production overhead:
.2 direct labor hour x $10 per hour	$2.00	$2.00
Total production cost per unit	$7.50	$9.00

1. The predetermined overhead rate is $10 per direct labor hour. The following production overhead costs are budgeted for 20x1.

	Q1	Q2	Q3	Q4	Entire Year
Indirect materials	$ 8,200	$ 9,200	$ 10,200	$ 11,200	$ 38,800
Indirect labor	38,800	42,800	46,800	50,800	179,200
Other overhead	29,000	34,000	39,000	44,000	146,000
Depreciation	20,000	20,000	20,000	20,000	80,000
Total overhead	$ 96,000	$106,000	$116,000	$126,000	$444,000

All of these costs will be paid in cash during the quarter incurred except for the depreciation charges.

1. ABC's quarterly selling and administrative expenses are $125,000, paid in cash.
2. Bean anticipates that dividends of $60,000 will be declared and paid in cash each quarter.
3. ABC's projected balance sheet as of December 31, 20x0, follows:

Cash	$ 95,000
Accounts receivable	237,600
Inventory:
Raw material	59,200
Finished goods	167,000
Plant and equipment (net of accumulated depreciation)	7,856,800
Total Assets	$8,415,600
Accounts payable	$ 61,800
Common stock	5,000,000
Retained earnings	3,353,800
Total liabilities and stockholders' equity	$8,415,600

what to do:

ABC's master budget for 20x1 by completing the following schedules and statements using the Excel template provided.

1. Sales budget
2. Cash receipts budget
3. Production budget
4. Direct materials and materials purchase budget
5. Direct labor budget
6. Overhead budget
7. Summary cash budget
8. Budgeted schedule of cost of goods manufactured and sold for the year 20x1
9. Budgeted income statement for 20x1
10. Budgeted statement of retained earnings for 20x1
11. Budgeted balance sheet as of December 31, 20x1.