Toyworks is a toy company that manufactures and sells a single product, the moodle. For planning and control purposes they utilize a quarterly master budget, which is usually developed at least six months in advance of the budget year. Their fiscal year end is December 31.

Early in 2021, Elizabeth Smith, the Toyworks controller, spent some time putting together a sales forecast for the next budget year (January to December, 2022). In April, however, Elizabeth decided to follow her dream and sail around the world. She left Toyworks with minimal notice.

Sarah Summers, the president of Toyworks, desperately needing the budget completed, has approached you, a management accounting student, for help in preparing the budget for the coming fiscal year. Your conversations with Susan and your investigations of the company's records have revealed the following information:

1. Elizabeth sales forecast consisted of these few lines:

For the year ended Dec. 31, 2021: 125,000 units at $19.00 each

For the year ended Dec. 31, 2022: 140,000 units at $19.00 each

For the year ended Dec. 31, 2023: 145,000 units at $19.00 each

1. Because the product is a toy, sales are very seasonal, with 65% of sales taking place in the last quarter of their fiscal year (Oct-Dec) as their customers, primarily retail stores, ramp up for the holiday season. 5% of sales take place in their first quarter, 10% in the second quarter, and 20% in their third quarter.

1. Because sales are seasonal, Toyworks must rent an additional storage facility from August to November to house the additional finished toys on hand. The only related cost is a flat $1,500 per month, payable at the beginning of the month.

1. Sales are on a cash and credit basis, with 85% collected during the quarter of the sale, and 15% the following quarter.

1. From previous experience, management has determined that an ending finished goods inventory equal to 10% of the next quarter's sales is required to meet customer demand. Opening finished goods inventory consists of 700 moodles.

1. The primary raw material used is a newly designed plastic. Each moodle requires 200 g (.2 kg) of plastic (including a wastage allowance), which the company purchases for $25.00 per kg. Toyworks finds it necessary to maintain an inventory balance equal to 15% of the following quarter's production needs of plastic as a precaution against stock-outs. Opening raw materials inventory consists of 231 kg of plastic. Toyworks pays for 80% of a quarter's purchases in the quarter of purchase and 20% in the following quarter.

1. Much of the manufacturing process is done by hand. Employees are paid an average of $24 per hour, including the employer's portion of employee benefits. All payroll costs are paid in the period in which they are incurred.

Each moodle spends a total of 15 minutes in production.

1. Due to the company's concentration on a single product, manufacturing overhead is allocated based on volume (i.e. the units produced). The variable overhead manufacturing rate is $1.25 per unit.

1. The fixed manufacturing overhead costs for the entire year are as follows:

Supervisor's salary 98,400

Depreciation on equipment 80,000

Insurance 28,000

Other 15,000

$ 221,400

• The annual insurance premium is paid at the beginning of October each year.

• All other "cash-related" fixed manufacturing overhead costs are incurred evenly over the year and paid as incurred.

• Toyworks uses the straight line method of depreciation.

1. Selling and administrative expenses are known to be a mixed cost; however, there is a lot of uncertainty about the portion that is fixed. Previous year's experience has provided the following information:

Unit Sales Selling and Admin Cost

Q1 25,000 54,000

Q2 12,500 29,000

Q3 6,250 16,500

Q4 81,250 166,500

These costs are paid in the quarter in which they occur.

1. During the fiscal year ended Dec. 31, 2022, Toyworks will be required to make quarterly income tax installment payments of $12,000. Outstanding income taxes from the year ended Dec. 31, 2021 must be paid in April, 2022. Income tax expense is estimated to be 25% of net income. Income taxes for the year ended December 31, 2022, in excess of install

1. Toyworks is planning to acquire additional manufacturing equipment for $148,300 cash. 60% of this amount is to be paid in April, 2022, the rest, in May, 2022. The manufacturing overhead costs shown above already include the depreciation on this equipment.

1. Toyworks has a policy of paying dividends at the end of each quarter. The president tells you that the board of directors is planning on continuing their policy of declaring dividends of $10,000 per quarter.

1. Toyworks has negotiated with the bank for a line of credit. Amounts can be borrowed in increments of $1,000 at a rate of 6%. Amounts are assumed to be borrowed at the beginning of the quarter when needed and repaid and the end of the quarter when cash is available.

1. A listing of the estimated balances in the company's ledger accounts as of December 31, 2021.

	Cash				$ 31,625
	Accounts receivable				231,563
	Inventory-raw materials				5,775
	Inventory-finished goods				10,207
	Prepaid insurance				14,000
	Capital assets (net)				1,050,000
					$ 1,343,170
	Accounts payable				$ 63,906
	Income tax payable				26,200
	Capital stock				800,000
	Retained earnings				453,064
					$ 1,343,170

Required:

Make a quarterly master budget for Toyworks for the year ended December 31, 2022, including the following schedules:

Sales Budget & Schedule of Cash Receipts

Production Budget

Direct Materials Budget & Schedule of Cash Disbursements

Direct Labour Budget

Manufacturing Overhead Budget

Selling and Administrative Expense Budget

Cash Budget

Complete using excel