the first quarter, an increase of $20\%$ is expected for the second quarter, a decrease of $10\%$ for the third quarter, and an increase of $25\%$ for the fourth quarter.

$2.$ The sales price should be $$75\mathrm{.}00$ for the first two quarters and $$82\mathrm{.}50$ for the last two quarters.

Prepare the Production Budget assuming:

$1.$ The company believes it can meet future sales needs with an ending inventory of $25\%$ of the next quarter, for the first two quarters, and $35\%$ of the next quarter, for the last two quarters.

$2.$ The expected sales in units for the first quarter of $2022$ is $11,000.$

Prepare the Direct Material Budget assuming:

$1.$ Ending inventory of raw material is expected to be $15\%$ of total pounds needed for production of the next quarter for the first two quarters and $20\%$ of the next quarter for the last two quarters.

$2.$ The expected pounds needed for production in the first quarter of $2022$ is $38,500.$

$3.$ Each product requires $3$ pounds of raw material.

$4.$ The expected cost per pound is $$8\mathrm{.}25.$

Prepare the Direct Labor Budget assuming:

$1.$ To produce a unit is required $2\mathrm{.}5$ hours of direct labor.

$2.$ The hourly wage rate is expected to be $$7\mathrm{.}50.$

Prepare the Manufacturing Overhead Budget assuming:

$1.$ The supervisor salaries are $$42,000$ per quarter.

$2.$ The indirect material is expected to be $$1\mathrm{.}15$ per direct labor hour.

$3.$ Depreciation is expected to be $$6,500$ per quarter.

$4.$ Other variable cost is expected to be $$1\mathrm{.}75$ per direct labor hour.

$5.$ Property taxes and insurance are expected to be $$11,500$ per quarter.

$6.$ Indirect labor is expected to be $$1\mathrm{.}60$ per direct labor hour.

$7.$ Maintenance is expected to be $$\mathrm{.}25$ per direct labor hour plus $$3,500$ per quarter.

Prepare the Selling and Administrative Budget assuming:

$1.$ Advertising expenses are expected to be of $$2,500$ per quarter.

$2.$ Freight$-$out is expected to be $$1\mathrm{.}10$ per unit sold.

$3.$ Sale Commission is expected to be $$2\mathrm{.}45$ per unit sold.

$4.$ Office salaries are expected to be $$3,200$ per quarter.

$5.$ Depreciation is expected to be $$1,750$ per quarter.

$6.$ Other variable costs are expected to be $$\mathrm{.}25$ per unit sold.

$7.$ Sales salaries are expected to be $$18,000$ per quarter.

$8.$ Property taxes and insurance are expected to be $$750$ per quarter.

$9.$ Miscellaneous expense is expected to be $$\mathrm{.}15$ per direct labor hour plus $$350$

per quarter.

Prepare the Budgeted Income Statement with the information above and the following information:

$1.$ Manufacturing overhead required per unit is $2\mathrm{.}5$

$2.$ Interest Expense is $$12,000.$

$3.$ Income tax rate is $15\mathrm{.}5\%$

Prepare the Cash Budget assuming:

$1.$ January $1,2021$ cash balance is expected to be $$60,000$

$2.$ Sales are expected to be collected:

a$.60\%$ in the quarter of the sale.

b$.25\%$ one quarter after the sale.

c$.15\%$ two quarter after the sale.

$3.$ Accounts Receivable of $$68,000$ at December $31,2020$ are expected to be collected in full, $$40,000$ in the first quarter and the remaining in the second quarter of $2021.$

$4.$ Direct material is expected to be paid:

a$.35\%$ in the quarter of purchase.

b$.35\%$ one quarter after the purchase.

c$.30\%$ two quarter after the purchase.

$5.$ Short term investments are expected to be sold for $$5,000$ in the second quarter and $$3,500$ in the third quarter.

$6.$ Long term investment is expected to be sold for $$25,000$ in the third quarter.

$7.$ Direct labor is $100\%$ paid in the quarter incurred.

$8.$ Manufacturing overhead, all items except depreciation are paid in the quarter incurred.

$9.$ Selling and administrative expenses, all items except depreciation are paid in the quarter incurred.

$10.$ Management plans to purchase a minivan in the fourth quarter for $$35,000,$ and a delivery truck in the third quarter for $$10,600.$

$11.$ McGregor makes equal quarterly payments of its estimated annual income taxes.

$12.$ Accounts payable of $$25,500$ at December $31,2020$ are expected to be paid in full in the second quarter.

$13.$ McGregor wishes to maintain a balance of at least $$30,000$ in cash.

$14.$ Assume interest of $$1,000$ in the repayment

$15.$ Common Stock are expected to be issued in the fourth quarter for an amount of $20,000.$

$16.$ Loans are repaid in the earlier quarter in which there is sufficient cash $($that is when the cash on hand exceeds the $$30,000$ minimum required balance$).$

Prepare the Budgeted Balance Sheet with the information above and the following information:

$1.$ Pertinent data at December $31,2020$ are as follows:

a$.$ Building and equipment, $$250,000$

b$.$ Accumulated depreciation $$120,000$

c$.$ Common stocks $$201,000$

d$.$ Retained earnings $$230,997\mathrm{.}48$

$2.$ The accounts that should be in the statements are:

a$.$ Cash

b$.$ Account receivable

c$.$ Finished goods inventory

d$.$ Raw material inventory

e$.$ Accounts payable

f$.$ The accounts mentioned in part $1$ of this section.

d$.$ Retained earnings $$230,997\mathrm{.}48$

$2.$ The accounts that should be in the statements are:

a$.$ Cash

b$.$ Account receivable

c$.$ Finished goods inventory

d$.$ Raw material inventory

e$.$ Accounts payable

f$.$ The accounts mentioned in part $1$ of this section.

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