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Serious Business, Inc. | |||||||
The company is preparing its budget for the coming year, 2017. The first step is to plan for the first quarter of that coming year. The following information has been gathered from their managers. | |||||||
Sales Information | |||||||
Period | Units | ||||||
November | 113,000 | Actual | Grading guidelines are on the instructions tab. | ||||
December | 101,000 | Actual | |||||
January | 111,000 | Planned | |||||
February | 112,000 | Planned | |||||
March | 114,000 | Planned | |||||
April | 124,000 | Planned | |||||
May | 136,000 | Planned | |||||
Unit selling price | $ 12.00 | ||||||
Finished Goods Inventory Planning | |||||||
The company likes to keep 10% of the next months unit sales in finished goods ending inventory. | |||||||
Accounts Receivable & Collections | |||||||
Sales on Account | 100% | ||||||
Collections Activity | |||||||
Month of Sale | 85% | ||||||
Month after Sale | 15% | ||||||
Balance at 12/31/16 | $ 185,000.00 | ||||||
Materials Inventory Costs & Planning | |||||||
Direct Materials | Amount Used per Unit | Cost | |||||
Metal | 2 | lb | $ 1.00 | lb | |||
The company likes to keep 5% of the material needed for the next month's production in raw materials ending inventory. | |||||||
Accounts Payable & Disbursements | |||||||
Purchases on Account | 100% | ||||||
Payment Activity | |||||||
Month of Purchase | 50% | ||||||
Month after Purchase | 50% | ||||||
Balance at 12/31/16 | $ 120,000 | ||||||
Direct Labor & Costs | |||||||
Time per Unit Production | 9 | minutes | |||||
Pay Rate/Hour | $ 7.00 | ||||||
Manufacturing Overhead Costs | |||||||
Variable costs per direct labor hour | |||||||
Indirect materials | $ 0.30 | ||||||
Indirect labor | 0.45 | ||||||
Utilities | 0.45 | ||||||
Maintenance | 0.25 | ||||||
Fixed costs per month | |||||||
Salaries | $ 42,000 | ||||||
Depreciation | 16,800 | ||||||
Property taxes | 2,675 | ||||||
Insurance | 1,200 | ||||||
Janitorial | 1,300 | ||||||
Selling and Administrative Costs | |||||||
Variable costs per unit sold | $ 1.45 | ||||||
Fixed costs per month | |||||||
Advertising | $ 15,000 | ||||||
Insurance | 14,000 | ||||||
Salaries | 72,000 | ||||||
Depreciation | 25,000 | ||||||
Other fixed costs | 3,000 | ||||||
Income Taxes | |||||||
Accrued on Monthly Net Income | 35% | rounded to nearest dollar | |||||
Amounts Accrued Q4 2016 paid January 2017 | $ 200,000 | ||||||
Cash and Financing Matters | |||||||
Cash Balance, 12/31/2016 | $ 90,000 | ||||||
2017 Minimum Balance Required | 715,000 | ||||||
Monthly Dividends | $ 2.25 | per share | |||||
Outstanding Shares | 5,000 | ||||||
Line of Credit | |||||||
Limit | None | ||||||
Borrowing Increment Required | $ 1,000 | ||||||
Interest Rate | 9% | ||||||
Draws | First of Month | ||||||
Repayments | Last of Month | ||||||
Interest accumulates to the loan balance and is paid in full with each repayment. | |||||||
Additional Item | |||||||
Fixed Asset Purchase | $ 445,000 | ||||||
Month | February |
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