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The managers of Gizmo Manufacturing Limited have gathered the following information to assist you in preparing the master budget for the first quarter of 2
The managers of Gizmo Manufacturing Limited have gathered the following information
to assist you in preparing the master budget for the first quarter of
Budgeted sales for the next four months are as follows:
January
February
March
April
The selling price is $ per unit.
Sales are on credit and are collected in month of sale & in month following
the sale.
Accounts receivable are expected to be $ on December & will be collected
In January
The company produces enough units each month to meet the months sales plus a desired
ending inventory equal to of the next month's estimated sales. The beginning inventory
at January is expected to be units.
Gizmo pays of direct materials in the month of purchase & pays the remaining in the
following month. Each unit of product requires kg of direct materials at a cost of $ per kg
The company purchases enough direct materials each month for the current month's production
and of next month's production requirements. Beginning & ending inventory for the quarter
of direct materials are budgeted to be for beginning & for ending.
The Accounts payable balance is expected to be $ at December & will be
paid in January.
The company plans to pays dividends of $ in January & March.
Gizmo Manufacturing Limited plans to purchase equipment costing $ in February
Each unit produced requires hours of direct labour at a cost of $hour
The company wishes to maintain a minimum cash balance of $ at the end of each month.
The company has an agreement with the local bank that allows them to borrow up to $
The interest rate on the loans is and there are no loans outstanding at December All
borrowing is done at the start of the month and all repayments are made at the end of the month.
The cash balance at December is budgeted to be $
Required:
Using the excel file included in the assignment complete the following budgets for the
first quarter of for Gizmo Manufacturing Limited January February & March
Sales Budget & Schedule of Expected Cash Collections
Production Budget
Direct Materials Purchases & Cash Disbursements Budget
Direct Labour Budget
Cash Budget
What will the accounts receivable & accounts payable balances be at March
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