Okay Co., a new startup business, is preparing their budget for the first quarter 2022 ending March 31 Budgeted sales of the company's only product for the next five months are: January 8,700 units February 6,000 units March 8,300 units April 5,300 units May 6,200 units 4. 5. . The selling price is $56 per unit. Prepare the following elements of the master budget for this problem: (150 points) 1. Sales budget (a with a schedule of expected cash collections). 2. Production budget. 3. Direct materials budget (b. with a schedule of expected cash disbursements for materials). Direct labor budget Manufacturing overhead budget. 6. Ending finished goods inventory budget. 7 Selling and administrative expense budget. 8. Cash budget 9. Budgeted income statement 10. Budgeted balance sheet. (beginning and ending balance sheet) SCHEDULE OF EXPECTED CASH COLLECTIONS All Sales are on account The company collects 60% of credit sales in the month of the sale, 35% of credit sales in the following month and 5% remain uncollectible. The accounts receivable balance on January 1 was $0. PRODUCTION BUDGET The company desires to have inventory on hand at the end of each month equal to 20% of the following month's budgeted unit sales. On December 31, o units were on hand. DIRECT MATERIALS BUDGET 6.0 pounds of material are required per unit of product. Management desires to have materials on hand at the end of each month equal to 10% of the following month's production needs. The beginning materials inventory was 0 pounds. . . . The material costs $.55 per pound. SCHEDULE OF EXPECTED CASH DISBURSEMENTS FOR MATERIAL 60% of a month's purchases are paid for in the month of purchase, 40% is paid for in the following month. No discounts are given for early payment. The accounts payable balance on December 31 was $0. DIRECT LABOR BUDGET Each unit produced requires.69 hours of direct labor. Each hour of direct labor costs the company $14.00 Managementfully adjusts the workforce to the workload each month. MANUFACTURING OVERHEAD BUDGET Variable manufacturing overhead is $3.20 per direct labor-hour. Fixed manufacturing overhead is $91,000 per month. This includes $15,000 in depreciation, which is not a cash outflow. ENDING FINISHED GOODS INVENTORY BUDGET Okay, a new startup business, uses absorption costing in its budgeted income statement and balance sheet. Manufacturing overhead is applied to units of product on the basis of direct labor- hours. The company has no work in process inventories SELLING AND ADMINISTRATIVE EXPENSE BUDGET Variable selling and administrative expenses are $1.10 per unit sold. Fixed selling and administrative expenses are $62,000 per month and include $8,000 in depreciation CASH BUDGET A line of credit is available at a local bank All borrowing occurs at the beginning of the month, and all repayments occur at the end of the month. Borrowing occurs in increments of $1,000 b. Any interest incurred during the first quarter will be paid at the end of the quarter. The interest rate is 18% per year. Okay, a new startup business, desires a cash balance of at least $30,000 at the end of each month. The cash balance at the beginning of January was $18,000. Cash dividends of $34,000 are to be paid to stockholders in February Equipment purchases of $122,000 are scheduled for January and $110,000 for February. This equipment will be installed and tested during the first quarter and will not become operation al until April, when depreciation charges will commence. 1 a 2. 3. 4. Additional Information: $300,000 The following balances exist on January 1: Land Equipment Common Stock $162,000 $480,000 Required: Part I A. Complete the Master Budget (ALL parts plus schedules) in Excel. B. Answer the following questions: 1. What are the budgeted sales for February? 2. What are the expected cash collections for February? 3. What is the accounts receivable balance at the end of March? 4. What is the estimated cost of raw materials purchases for February? 5. What is the estimated accounts payable balance at the end of March? 6. What is the estimated finished goods inventory balance at the end of March? 7 What is the estimated cost of goods sold and gross margin for March? 8. What is the estimated total selling and administrative expense for February? 9. What is the estimated net operating in come for March? 10. What is the estimated retained earnings balance for March? Part II (Chapter 25) (50 points) I have provided templates based on my calculations and my answers. You may use them or create your own. Show all work/calculations to justify your decision. Label your work appropriately. If I can't understand it, I can't grade it. 2 3 4 5 units units units units units 6 7 8 9 SALES BUDGET 10 Quarter 11 12 Budgeted sales (units) Selling price per unit Total sales 13 14 15 SCHEDULE OF EXPECTED CASH COLLECTIONS 16 Quarter 20 17 18 Accounts receivable beginning balance 19 April sales April 21 May 22 May sales 23 May 24 June 25 June sales 26 June 27 Total cash collections 28 29 PRODUCTION BUDGET 30 31 32 Budgeted sales 33 Add desired ending inventory Total needs 35 Less beginning inventory 36 Required production 37 38 DIRECT MATERIALS BUDGET 39 Quarter 40 Quarter 41 42 43 44 45 46 47 Required production in units Raw materials per unit (pounds) Production needs (pounds) Add desired ending inventory (pounds) Total needs (pounds) Less beginning inventory (pounds) Raw materials to be purchased (pounds) Cost of raw materials to be purchased at $0.40 per pound 48 49 50 SCHEDULE OF EXPECTED CASH DISBURSEMENTS FOR MATERIAL 51 52 53 Accounts payable beginning balance 54 April purchases: 55 April 56 May 57 May purchases: 58 May 59 June 60 June purchases: 61 June 62 Total cash disbursements for materials 63 64 DIRECT LABOR BUDGET 65 66 67 Required production Direct labor-hours per unit 69 Total direct labor-hours needed 70 Direct labor cost per hour 71 Total direct labor cost 72 73 MANUFACTURING OVERHEAD BUDGET 74 75 76 Budgeted direct labor-hours 77 Variable manufacturing overhead rate 78 Variable manufacturing overhead 79 Fixed manufacturing overhead 80 Total manufacturing overhead $1 Less depreciation Cash disbursements for manufacturing overhead 83 $4 ENDING FINISHED GOODS INVENTORY BUDGET 85 * Computation of absorption unit product cost: $7 Direct materials 89 Direct labor 90 Manufacturing overhead 91 Unit product cost 92 94 Predetermined Overhead Rate = 95 96 97 Budgeted ending finished goods inventory: 98 Ending finished goods inventory in units 99 Unit product cost 00 Ending finished goods inventory in dollars 01 68 ** Quantity pounds hours hours Total manufacturing overhead = Total direct labor hours Cost Quarter Quarter Quarter per pound per hour per hour Total 102 SELLING AND ADMINISTRATIVE EXPENSE BUDGET 103 104 105 Budgeted sales in units Quarter 106 Variable selling and administrative expense per unit 107 Variable selling and administrative expense 108 Fixed selling and administrative expense 109 Total selling and administrative expense 110 Less depreciation Cash disbursements for selling and administrative 111 expenses 112 113 CASH BUDGET 114 115 Cart Budger 116 117 Quarter 118 119 Cash balanoe, beginning 120 Add receipts: 121 Cash collections 122 Total cash available 123 124 Less disbursements: 125 Direct materials 126 Direct labor 127 Manufacturing overhead 128 Selling & administrative 129 Equipment purchases 130 Dividends 131 Total disbursements 132 Excess (deficiency) of cash available over 133 disbursements 134 135 Financing: 136 Borrowings 137 Repayments 138 Interest 139 Total financing 140 141 Cash balance, ending 142 143 Interest 144 145 146 BUDGETED INCOME STATEMENT 147 148 149 Budgeted home Vereen 150 151 151 152 153 154 155 156 157 158 159 160 161 162 Net sales Cost of goods sold Gross margin Selling & administrative expenses Net operating income Interest expense Net income Computation of net sales Sales Less uncollectible amounts Net sales Computation of cost of goods sold Budgeted sales (units) Unit product cost Cost of goods sold 163 164 BEGINNING BALANCE SHEET (REQUIRED (Based on information given, beginning balances and calculations) 165 166 Balance Sheer 167 168 169 170 171 172 173 174 175 176 177 178 179 180 181 182 183 184 185 Current assets: Cash Accounts receivable Raw materials inventory Finished goods inventory Plant and equipment: Land Buildings and equipment Accumulated depreciation Total assets Liabilities: Accounts payable Stockholders' equity Common stock Retained earnings Total liabilities and stockholders' equity 186 187 Fudgered Balance Sheet 188 189 190 191 192 193 194 195 196 197 198 199 200 201 202 203 204 205 206 207 208 209 Current assets: Cash Accounts receivable Raw materials inventory Finished goods inventory Plant and equipment: Land Buildings and equipment Accumulated depreciation Total assets Liabilities: Accounts payat Stockholders' equity Common stock Retained earnings Total liabilities and stockholders' equity