The statuettes sell for $700 each. Recent and forecasted sales (in-units) are as follows: 1 July (actual) 3,500 August (actual) 3,700 September (actual) 3,8001 October 2,2009 November 2,800 December 4,500 January 1,000 February 1,500 March 1,800 1 Inventories of finished goods on hand at the end of each month are to be equal to 50% of the following months budgeted sales. As of September 30th the company had 1,100 statuettes-in-inventory. I Each-statuette requires 75 ounces of bronze, which the company purchases for $.45 per ounce. Rock Solid-keeps an ending inventory of bronze at the end of each month equal to 75% of the next month's production needs. As of September 30th the company had-140,625 ounces of bronze on hand. Purchases of raw materials are paid for as follows: 50%-in-the month of purchase and the remaining 50%- in the following month. All sales are on credit, with no discount, and payable within 15 days. The company has found, however, that only 40% of a month's sales are collected by month-end. An additional -45%-is collected in the month following, and the remaining 15%-is collected in the second month-following. Bad debts have been negligible. 1 Each-statuette requires 15 hours to mould and polish. -Employees who make the statuettes are paid $25 per hour and never work overtime (i.e. the company has enough casual workers that they can call-in-if additional work is required). 1 Manufacturing overhead-includes all the costs of production other than direct materials and direct labour. The variable component is $45.per-statuette in production and the fixed.component.is $117,000 per month (this amount includes depreciation of $22,000 per month-on-the-furnaces, moulds and polishing equipment). Manufacturing overhead costs are allocated to statuettes on a per unit basis. I Rock Solid's monthly operating expenses are given below: 1 Variable: 1 Royalties paid to The Rock $50 per statuette sold Fixed: Wages & salaries $82,000 Utilities 8,0001 Insurance expired 1,500 Depreciation 11,500 Miscellaneous 23,500 1 All operating expenses are paid during the month-in-cash, with the exception of the depreciation-and- insurance expenses. Due to the popularity of The Rock's movies the company is planning on producing different styles of statuettes with movie tie-ins. To accommodate the expected increase in demand the company will be purchasing a new blast-furnace-in-October for $740,000-and-some new moulds in November for $250,000. Rock Solid declares a dividend of $100,000 on the last day of each quarter which is then paid in the first month of the next quarter. I 1 The balance sheet at September 30th.is given below: 1 1 Assets Cash $ 45,000 Accounts receivable 1,984,500 Inventory, raw materials 63,2811 Inventory, finished goods 542,5071 Unexpired insurance 13,500 Fixed assets 3,462,000 Accumulated depreciation (1,117,000) 2.345,000 1 Total Assets $4.993.788 1 Liabilities and Shareholders' Equity Accounts payable, purchases $. - 44,2971 Dividends payable 100,000 Capital stock, no par 2,000,000 Retained earnings 2,848,4919 Total liabilities and shareholders' equity $4.993.7881 1 Management of Rock Solid requires a minimum ending cash balance each month of $20,000. The company can borrow money from its bank at 12% annual-interest. All borrowing must be done at the beginning of a month, and repayments must be made at the end of a month. Repayments of principal must be in round $1,000 amounts. Borrowing is also in-round $1,000 amounts. Interest is computed and paid at the end of each quarter on all loans outstanding during the quarter. Round all interest payments to the nearest whole dollar. Compute interest using whole months. The company wishes to use any excess cash to pay loans off as rapidly as possible. 1 1 REQUIRED: 11 1.Prepare a Sales Budget;-Production Budget, Direct Materials-Budget; Direct Labour Budget; Manufacturing Overhead Budget; and Sales and Administration Budget. I 2. Prepare Schedules of Expected Cash Collections and Expected-CashDisbursements for Material as well as a Cash Budget. 1 3. Prepare a Budgeted Income Statement for the quarterending December 31st. 1 4.Prepare a Budgeted Balance Sheet at December 31st