The facts and figures relating to Irrigation Corporation are as follows. Irrigation Corporation produces plastic garden sprinklers. The company is preparing its budget for 2021. Irrigation has collected the following information from the managers.

1. Sales:

Sales for December 2020 102,100 units

Expected sales for January 2021 113,000 units

Expected sales for February 2021 112,500 units

Expected sales for March 2021 116,000 units

Expected sales for April 2021 125,000 units

Expected sales for May 2021 137,500 units

Selling price per unit $4

Irrigation likes to keep 10% of the next months unit sales in ending inventory.

All sales are on credit. 95% of the accounts receivable are collected in the month of sale and 5% of the accounts receivable are collected in the month after sale. Accounts receivable on December 31, 2020, totalled $183,780.

2. Direct Materials:

Two (3) pounds of direct materials is needed to produce one unit. Irrigation likes to keep 5% of the materials needed for the next months production in its ending inventory. Raw materials on hand on December 31, 2020, totalled 12,295 pounds.

Payment for materials is made within 10 days. 70% is paid in the month of purchase, and 30% is paid after the month of purchase. Accounts payable on December 31, 2020, totalled $130,595.

determine the price per pound logically from the information provided here.

3. Direct Labor

Labor requires 10 minutes per unit for completion and is paid at a rate of $15 per hour.

4. Manufacturing Overhead

Indirect materials $0.35 per direct labor hour

Indirect labor $0.55 per direct labor hour

Utilities $0.50 per direct labor hour

Maintenance $0.30 per direct labor hour

Factory supervisors salary $40,200 per month

Factory Depreciation $18,600 per month

Property taxes $ 2,765 per month

Insurance $ 1,020 per month

Repairs $ 1,030 per month

5. Selling and Administrative expenses

Salaries $70,200 per month

Advertising $10,500 per month

Insurance $ 1,040 per month

Office Depreciation $ 2,050 per month

Miscellaneous fixed costs $ 3,050 per month

Commission $0.20 per unit of sales

Further information

The cash balance on December 31, 2020, totalled $700,500.

Management has decided it would like to maintain a monthly cash balance of at least $300,000 beginning on January 31, 2021.

The company receives dividends @ $0.50 per share for 150,000 shares each month.

The company has an open line of credit with National Bank. The terms of the agreement require borrowing to be in the increments of $10,000, and the interest rate is 6% pa. Irrigation borrows on the first day of the month and repays on the last day of the month if possible.

A $300,000 equipment purchase is planned for February 2021.

Required

Prepare for the first quarter (January, February & March) of 2021 by using a MS EXCEL spreadsheet:

1. Sales Budget
2. Production Budget
3. Direct Materials Purchase Budget
4. Direct Labor Budget
5. Manufacturing Overhead Budget
6. Selling and Administration Budget
7. Budgeted income statement
8. Schedule of expected cash collections from customers
9. Schedule for expected cash payments for materials purchases
10. A Cash Budget.