The information below about Garden's operations has been assembled to assist budget preparation. The company is preparing its master budget for the first quarter of $2025.$ The budget will detail each month$$s activity and the activity for the quarter in total. The master budget will be based on the following information: $1.$ Selling price is $$60$ per unit in $2025$ and will not change for the first two quarters of $2025.$ Actual and estimated sales are as follows: Actual $2024$ November: $10,000$ units December: $12,000$ units Estimated $2025$ January: $11,000$ units February: $10,000$ units March: $13,000$ units April: $11,000$ units May: $11,000$ units $2.$ The company produces enough units each month to meet that month$$s sales plus a desired inventory level equal to $20\%$ of next month$$s estimated sales. Finished Goods inventory at the end of December $2024$ consisted of $2,200$ units at a variable cost of $$33$ each. $3.$ The company purchases enough raw materials each month for the current month$$s production requirement and $25\%$ of next month's production requirements. Each unit of product requires $5$ kilograms of raw material at $$0\mathrm{.}60$ per kilogram. There were $13,500$ kilograms of raw materials in inventory at the end of December $2024.$ Garden pays $40\%$ of raw material purchases in the month of purchase and the remaining $60\%$ in the following month. $4.$ Each unit of finished product requires $1\mathrm{.}25$ labour$-$hours. The average wage rate is $$16$ per hour. All salaries and wages are paid at the current month in cash. $5.$ Variable manufacturing overhead is calculated and applied at $50\%$ of the direct labour cost. Page $2$ of $76.$ Fixed overhead costs $($per month$)$ are as follows: Factory supervisor's salary Factory insurance Factory rent Depreciation of factory equipment $$75,0001,4008,0001,2007.$ Credit sales on account for the month are $60\%$ of the total sales. The company collects $50\%$ of the credit sales during the first month following after the month of sale and the next $50\%$ of the credit sales during the second month. $8.$ Variable selling and administrative expenses consist of $$4$ for shipping and $10\%$ of sales for commissions. $9.$ Total fixed selling and administrative expenses are as follows: Advertising Depreciation Insurance Salaries Other $$3009,0002504,00014,55010.$ The company will purchase assets for use in the sales office at a cost of $$300,000,$ which will be paid cash on January $02,2024.$ The monthly depreciation expense on the additional capital assets will be $$6,000,$ starting from January, $2024.$ Page $3$ of $711.$ The balance sheet as of December $31,2024,$ is as follows: Assets Cash Accounts receivable Inventory: Raw materials Finished goods Plant and equipment Less: accumulated depreciation Total assets Liabilities and Equity Accounts payable $6\%$ long$-$term notes payable Common shares Retained earnings Total liabilities and shareholders' equity $$80,000612,000$ $$8,10072,6001,000,000-100,00080,700900,000$ $$1,672,700$ $$24,000900,000735,00013,700$ $$1,672,700$ Additional information available follows: All cash payments except purchases of raw materials are made monthly as incurred. All borrowings occur at the beginning of each month, and all repayments occur at the end of the month. Borrowings and repayments may occur in any amount. All interest on borrowed funds is paid at the end of each month at a rate of $0\mathrm{.}5\%$ per month. A minimum cash balance of $$30,000$ is required at the end of each month. Required: Calculation Part Prepare the following budgets for each of the first three months of $2025$: $1.$ Sales budget and schedule of expected cash collections $($use Excel worksheet "Sales"$)2.$ Production budget, raw materials purchase budget, cash disbursements for the raw materials purchased $($use Excel worksheet "Production"$)3.$ Direct labour and manufacturing overhead budget, cash paid for the direct labour and overhead $($use Excel worksheet $"$DL and MOH"$)4.$ Selling and administrative budget and cash paid for selling and administrative $($use Excel worksheet $"$S&A$")5.$ Cash budget $($use Excel worksheet "Cash budget"$)6.$ Prepare a budgeted income statement for each of the first three months of $2024($use Excel worksheet $"$IS$")7.$ Prepare budgeted balance sheet as at March $31,2025($use Excel worksheet $"$BS$")$ Case Analysis Part: $1.$ Provide brief analysis of the current situation of the company. Use quantitative and qualitative analysis. Currently, production department uses a lower grade; more economical direct material when producing its product. To address the issue with the direct materials, the company purchasing department was able to source higher quality, more durable direct materials at a cost of $$2\mathrm{.}65$ per kilogram. The team believes the use of this material will improve quality and increase sales with $25\%.$