The CityCrafters Company manufactures Skateboards. The company set up its

balance sheet on December $1,2023$ by selling $$4,000,000$ in common stock. Some

of the cash raised from selling the stock was then used to purchase land costing

$$500,000$ and Building Improvements and Equipment costing $$2,250,000$ with the

remaining cash being used to fund the startup operations of the company. After

setting up its balance sheet the company began operations on January $1,2024.$

Data Section

The company has assembled the following information to assist you in the budget

preparation process for the first quarter $(3$ months$)$ of $2024.$ The company has

estimated the following budgeted unit sales for the first $5$ months of the year:

Jan $10,500$ Apr $10,500$

Feb $11,000$ May $10,000$

Mar $12,000$

The selling price of the snowboard is $$225$ per unit. Thirty percent of sales are cash

sales and the balance is on credit. The credit sales are collected as follows: $50\%$ in

the month of sale, $40\%$ in the second month of sale and the balance in the third

month of sale.

The company maintains a finished goods inventory of $25\%$ of the following month$$s

unit sales. There is no beginning inventory of finished goods. Each snowboard

requires the following raw material and direct labor:

Wood $3\mathrm{.}5$ feet at $$14\mathrm{.}42$ per foot

Direct labor $3$ hours per snowboard at $$17\mathrm{.}66$ per hour

Management would like to end each month with an inventory of raw $($direct$)$

materials equal to $20\%$ of the following months production needs. There is no

beginning inventory of raw materials. The company pays $20\%$ of raw material

purchases in the month of purchase, $55\%$ in the second month and the balance in

the third month.

Variable manufacturing overhead is $$12\mathrm{.}50$ per direct manufacturing labor hour.

The fixed manufacturing overhead cost per quarter is $$171,180.$ The only noncash

element of manufacturing overhead is depreciation which is $$30,000$ per quarter.

The company$$s variable selling and administrative expense per unit is $$4\mathrm{.}25.$ In

addition, variable shipping expenses are $$2\mathrm{.}60$ per unit. Fixed selling and

administrative expenses include the following: advertising expenses of $$46,500$ per

month, executive salaries of $$55,800$ per month, depreciation of $$12,500$ per

month. Rental payment for the manufacturing facility is estimated at $$101,515$ per

month. Additionally, insurance payment total $$35,530$ per month while property

taxes total $$24,365$ per month.

The beginning cash balance on January $1,2024$ is $$1,250,000.$ Management plans

to spend some money on capital expenditures $($fixed assets$)$ on remodeling the

building it is renting. This remodeling project would cost $$2,250,000$ and would be

depreciated straight line over its $15-$year useful life with no salvage value. Of this

remodeling project, $20\%$ of the project is related to administrative offices in the

building, and the remaining $80\%$ of the project is to remodel the manufacturing

area of the building.

The company$$s board of directors has also approved cash dividends of $$38,500$ paid

in cash in the month of March $2024.$

The company requires a minimum cash balance of at least $$800,000$ at the end of

each month. If the ending cash balance is insufficient, the company would obtain a

short$-$term loan from a local bank. The bank has agreed to extend financing to

Hansen at an annual interest rate of $5\mathrm{.}5\%$ per year. Any borrowing would occur at

the beginning of the current month and any payment $($interest and principal$)$ will be

made in the beginning of the following month $($if sufficient cash surplus is available

for such payments$).$ Interest must be paid first on any outstanding loan balance

before any principal payments are made.

Project Requirements

This project will be due on Sunday, October $20$th at $11$:$59$pm$.$ You will be using

the template that is given to you that already includes all of the assumptions from

the Data Section above to create all of the required schedules to develop a full

master budget for CityCrafters. The requirements for the master budget are as

follows:

$1.$ Using the excel template provided, you will complete the following

worksheets:

a$.$ Sales budget

b$.$ Production budget

c$.$ Direct materials budget

d$.$ Direct labor budget

e$.$ Manufacturing overhead budget

f$.$ Finished goods inventory budget

g$.$ Selling, general & administrative budget

h$.$ Cash budget

i$.$ Income statement

j$.$ Balance sheet