ToyWorks Ltd. Direct Materials Budget - SAA (kilograms) For the year ended December 31, 2008 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year Units to be produced Raw Materials needed per unit 11 50 Production needs Add desired ending inventory Total needs Less beginning inventory Raw materials to be purchased LILI LILI LILI LILI LI.LI LI.LI LILI LILI N Cost of SAA per kilogram Gross cost of purchases of SAA $ $ $ $ S $ $ $ $. The beginning accounts payable (associated with PlasticPR purchases only) will consist of $101,233 arising from the following estimated material purchases for November and December of 2020: Material purchases in November 2020: $213,850 Material purchases in December 2020: $138,400 Wood PartsMusical Instruments pays for 50% of a month's purchases in the month of purchase, 35% in the following month and the remaining 15% two months aner the month of purchase. There is no early payment discount. . The manufacturing process for XylophonelBXs is divided into three separate activities. The first step is the forming process, during which the PlasticPR is liqueed and formed into several shapes that snap together to make the musical instmnlent. During the next stage, the molded pieces are fused together using heat. This step is referred to as the assembly stage. The last stage is for nishing, during which the wheel and the cord are attached and the musical instrument is prepared for shipping. . The rst two steps of the manufacturing process are highly automated, so the only employees are three supervisors, who are trained to operate the equipment and make repairs as required. The supervisors work shis, allowing the plant to operate for longer hours during the busier months. They are also responsible for managing the employees who work in the nishing department. . The last step. finishing, is the only part of the manufacturing process that employs direct labour. Most of the staff work on a parttime basis, so their hours can be set based on production requirements. This also eliminates the need for overtime. These employees are paid based on the number of units produced. They receive an average of $20.00 per hour including employee benets. Each XylophonelBX spends 13 minutes in the nishing department . Because of the large difference in the manufacturing stages, Wood PartsMusical Instruments uses two separate variable manufacturing overhead rates. The fanning and assembba departments use similar equipment and with the company's concentration on a single product, the manufacturing overhead is allocated based on volume (ie. the units produced). The combined unit variable overhead manufacturing rate for forming and assembly is $6.50, consisting of: Utilities$3.00; Indirect Materials$1.00; Plant maintenance$l.50; environmental fee$0.70; and Other$0.30. The best cost driver for the nishing department is considered to be direct labour hours. Here the predetermined variable manufacturing overhead is expected to be $4.00 per hour. Wood Parts-Musical Instruments Ltd Wood PartsMusical Instruments LTd [WPMI] is a worldwide woodennmsical part manufacturing rm based in North America. After many years in the market, the Peter'oorough division, which produces one product called L'XylophonelBX'" reaches a spike on the sales level. The Management 1wants to have a significant investment to expand the facility and. increase production, but it is requesting fromthe division toprrepare ammnthly2021 budget. The scal year ends onDec 31. The division manager forecast the following sales: For the year ended Dec 31, 2020: 95,000 units at $50.00 each ' [*Expected sales for the year ended December 31, 2020 are basedon actual sales to date and budgeted sales for the duration of the year) For the year ended Dec 31, 2021: 100,000 units at $50.00 each For the year ended Dec 31, 2022: 110,000 units at $50.00 each. 1. The management expect a distribution of sales for each month based on percentage of the total budgeted as follow: J an, Feb & Mar 2% each; Apr, Aug and Sep 6% each; May, Jun & Jul 9% each; Oct 10%; Nov 17% 3'; Dec 22%. 2. From previous experience, management has determined that an ending inventory equal to 20% of the next month's sales is required to t the buyer's demands. 3. Because sales are seasonal, Wood PartsMusical Instruments must rent an additional storage facility from October to December to house the additional inventory on hand The only related cost is a flat $10,000 per month, payable at the beginning of the month 4. The Xylophonele requires three types ofraw materials: Plastic PR is a compact material that is purchased in powder form Each XylophonelBX requires 0.5 kilograms ofPlastic PR, at a cost of$25.00 per kilogram. The supplier of Plastic PR tends to be somewhat erratic so Wood PartsMusical Instruments finds it necessary to maintain an inventory balance equal to 40% of the following month's production needs as a precaution against stockouts. A plastic wheel assembly is purchased inkit form, and is attached during the assembly process. For a small premium, Wood PartsMusical Instruments has made a HT agreement with the supplier which includes ontime and quality assurances. Each XylophonelBX uses two kits, which cost $1.00 each The supplier must be paid in cash The nal component for the musical instrument is a length of cord which is used to pull the mobile XylophonelBX along the ground or oor. The cord supplier must be paid in cash. On the rst day of every month she delivers exactly the right amount to manufacture the budgeted number of units for that month. It costs $2.00 per meter and Wood PartsNhasical Instruments uses onehalf meter for each Xylophone IBX 10. Fixed manufacturing overhead costs are not separated between departments. The total costs for the entire year are as follows: Training and development $ 43,620 Supervisor's salary 269,400 Depreciation on equipment 178,800 Insurance 96,000 Other 117.600 $ 705.420 . The annual insurance premium is paid at the beginning of September each year. There should be no change in the premium from last year. . All other "cash-related" fixed manufacturing overhead costs are incurred evenly over the year and paid as incurred. . Wood Parts-Musical Instruments Ltd uses the straight line method of Depreciation 11. 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 (rounded): Lowest level of sales: 70,000 units Total Operating Expenses: $769,800 Highest level of sales: 110,000 units Total Operating Expenses: $1,009,800 The annual amount of Depreciation on office furniture and equipment is only $21,000-and this amount is already included in the fixed portion of the selling and administration expenses. Not included in the above expenses is bad debt expense. Payments for selling and administrative expenses occur in the month in which they are incurred. 12. Sales are on cash and on account (credit), 70% of the sales are collected during the month of sales, 20% the following month, 9.5% the month thereafter. 1 of 1% of sales are considered uncollectible (Bad debt expense) 13. Sales in November and December 2020 are expected to be $807,500 and $1,045,000 respectively. Based on the above collection pattern this will result in Accounts Receivable of $384,988 at December 31, 2020 which will be collected in January and February, 2021. 14. During the fiscal year ended December 31, 2021, Wood Parts-Musical Instruments will be required to make monthly income tax installment payments of $5,000. Outstanding income taxes from the year ended December 31, 2020 must be paid in April 2021. Income tax expense is estimated to be 30% of net income. Income taxes for the year ended December 31, 2021, in excess of installment payments, will be paid in April, 2022.15. Wood Parts-Musical Instruments approved to purchase new equipment for $306,000 cash Three equal payments to the suppliers will be in February 2021, March 2021 and April 2021. The equipment depreciation from this equipment, is already considered (included) in the manufacturing overhead cost given. 16. The company wants to maintain at the end of each month, a minimum bank balance of $80,000. In case the company has a deficiency of money or it is not able to reach this minimum bank balance, the company can borrow from a line of credit at the same bank at the rate of 12% per annum. All borrowing is considered to happen on the first day of the month, repayments are on the last day of the month. All borrowings and repayments from the bank should be in multiples of $1,000 and interest must be paid at the end of each month. Interest is calculated on the balance at the beginning of the month, which includes any amounts borrowed that month. 17. Wood Parts-Musical Instruments LTd pays dividends at the end of each quarter, and based on the last meetings, the company will continue paying $50,000 dividends per quarter. 18. A listing of the estimated balances in the company's ledger accounts as of December 31, 2020 is given below: Statement of Financial Position at Dec 31, 2020. Assets Cash 83.365 Accounts receivable 384,988 Inventory-raw materials (PlasticRP) 10,000 Inventory-finished goods 14,200 Prepaid Insurance 64,000 Capital assets (net) 724.000 Total assets $1.280.553 Liabilities and Shareholders' Equity Accounts payable $ 101,278 Income taxes payable 22.500 Capital stock 1,000,000 Retained Earnings 156.775 Total liabilities and shareholders' equity $1.280.553ToyWorks Ltd. Production Budget For the year ended December 31, 2008 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year 1 12 Budgeted sales in units 1 1 1 1 1 1 1 1 Add desired ending inventory of 0 lo 0 0 0 finished goods 0 1 2 13 Total needs Less beginning inventory of finished 0 0 0 0 goods 2 13 Required production 1 1ToyWorks Ltd. Sales Budget For the year ended December 31, 2008 Jan Feb Mar Ap May Jun Jul Aug Sep Oct Nov Dec Year Percent of Annual Sales 1% 5% 3% 5% 7% 7% 5% 5% 7% 10% 15% 30% 100% Expected sales in units 12 Selling price per unit $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 100.00 Total Budgeted Sales $ $ $ 12 ToyWorks Ltd. Schedule of Expected Cash Collections For the year ended December 31, 2008 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year AR from November AR from December Jan Feb Mar Apr May June July August Sept Oct Nov Dec