Toodle Train Company makes toy trains for children. The trains are made of painted wood with rubber wheels that really turn. The budget for unit sales for the first half of 2010:

January	500
February	800
March	700
April	1500
May	1600
June	1550

Toodle expects July sales to be 1,750 units. Each train sells for $30. There were 25 trains in Inventory on December 31, 2010. It is the company's policy to maintain a finished goods inventory at the end of each month equal to 5% of next month's anticipated sales.

Each train requires two types of direct materials: wood and wheels. At December 31, 2010 there was 23 board feet of wood and 206 wheels on hand.

Material	Units used per train	Cost per unit	Desired Ending Inventory
Wood	.3 board feet	$3 per board foot	15% * next month’s use
Wheels	4 wheels	$ 0.10 per wheel	10%* next month’s use

Each train requires .25 direct labor hours to produce. The average hourly wage including benefits is $20 per hour.

Manufacturing Overhead costs for Toodle Train Company are as follows:

Indirect Materials	$1.00 per direct labor hour
Indirect Labor	$1.40 per direct labor hour
Utilities	.10 per direct labor hour and $800 per month
Maintenance	.03 per direct labor hour and $400 per month
Supervisory Salaries	$2,500 per month
Depreciation	$1500 per month
Property Taxes	$80 per month

Selling and Administrative Expenses are as follows:

Advertising	$2,500 per month
Office Salaries	$1,800 per month
Depreciation	$75 per month
Property Taxes	$50 per month

10% of sales are for cash; the rest are sold on account. 70% of sales on account are collected in the month following the sale, 20% in the next month and 10% in the following month. So far, Toodle Train has had no trouble with collecting all Accounts Receivable.

Direct materials are all purchased on account and paid for in the month following the purchase. Manufacturing overhead, direct labor and selling and administrative expenses are paid in the month they occur. Accounts Payable on December 31, 2010 was $400.

Toodle Train Company currently has no debt. The cash balance December 31, 2010 was $9,000 and company policy is to keep cash balance of at least $5,000. If the line of credit must be used, interest of 1% per month is paid in the following month on the balance of the line of credit at the end of the prior month.

Instructions:

Note that many of the cells in the worksheet are linked to other worksheets (so that you can see the flow of information, for example, from the sales budget to the production budget and then from the production budget to the direct materials budget, and so on).

Prepare the following for first 6 months of the year 2010 (January through June):

Sales budget, production budget, direct materials budget, direct labor budget, manufacturing overhead budget, calculation of per unit cost, selling and administrative budget, Pro Forma Income Statement and cash budget.

Note: on the Direct Materials Budgets, assume the ending inventory for June is equal to the ending inventory for May.

Round all numbers to the nearest whole number (except for per-unit costs, like direct materials per unit, direct labor hours per unit, etc).. Each budget must be on a separate worksheet in one Excel file. Both direct materials budgets may be in the same worksheet.