The scenario is as follows: You are the Controller for the Window Blinds Company (WBC), a firm that makes wooden window blinds. Your firm just reached an agreement with the local Home Depot to begin selling your products on a test basis in their store for the months of April, May and June 2019. Management expects sales to increase as a result of this test and you realize that a sufficient quantity of product must be produced to avoid stock outs. You are to prepare a Master Budget for the second quarter of 2019 (April, May and June) to assist in managing operations, determining how much material needs to be ordered, and how much labor will be required. In addition, you also must prepare a pro-forma income statement for the 2nd Quarter (April, May and June) that will to be used in evaluating the results of the test program. You must prepare your budget and pro forma income statement using Excel. The attached format for the Excel spreadsheet must be used. The completed worksheet must contain formulas and cell references for all calculations. Information Sales and Cash Collection Information WBC sales staff have prepared a schedule of the budgeted sales for the months of January through December 2019. Expected unit sales for the months of 2019 are listed below: January February March April May June July August September October November December TOTAL 1000 3000 3000 2250 10000 6750 1000 1500 1000 2000 1000 2500 35,000 WBC sells the blinds to Home Depot and its other customers at a price of $40 each. WBC sells all the blinds on account and expects to collect 70% of the cash in the month of the sale and 15% in the month after the sale and the remaining 15% in the 2nd month following the month of sale. Production and Material Budget Information Finished Goods Window Blinds Company (WBC) manufactures window blinds from wood. Each blind uses 3 feet of "high-quality" teak hardwood, which costs WBC $3 per foot. WBC likes to end the month with a finished goods inventory equal to 30% of the planned sales for the next month. Raw Materials In addition to the finished goods inventory, WBC also has an inventory of Teak wood in a climate controlled warehouse. WBC like to have in its warehouse a beginning inventory equal to 40% of the teak wood it will need for the month's production. WBC pays for the material it purchases in the month of purchase. Labor Budget Information WBC pays its workers $10 per hour and each blind takes 1 hour of labor to complete. All wages are paid in the month incurred. Manufacturing Overhead Information Total manufacturing overhead is estimated to be $94,500. Manufacturing Overhead is applied equally to each product produced. Overhead is paid in the month incurred. Selling and Administrative Costs Selling and administrative expenses are a combination of fixed and variable costs. Fixed Selling and Administrative costs are estimated at $8,000 per month and variable selling and administrative costs are $5.00 per unit sold. Selling and administrative costs are paid in the month incurred. Cash Management WBC starts the month of April with $2,000 in the bank. Management would like to maintain a minimum of $10,000 in the bank. WBC just opened a line of credit with the bank that they can draw upon on the last day of the month. Interest is paid at the end of the month and the line of credit can be paid back in any increment. Interest is charged at 1% per month on the outstanding balance borrowed. Required: A. Prepare the following for WBC for the second quarter of the year (April, May, June). Include each month in your projections as well as the 2nd Quarter totals for each budget. 1. Sales Budget 2. Production Budget 3. Raw Materials Purchases Budget 4. Direct Labor Budget 5. Manufacturing Overhead Budget 6. Budgeted Cost of Cost of Goods Sold 7. Selling and Administrative Expenses Budget 8. WBC's Pro Forma Income Statement for the 2nd Quarter. 9. Cash Budget for the 2nd Quarter