UBS company, a manufacturing business that sells baskets, wants a master budget prepared for the first three months of this year (January, February and March).

The managers of the different departments have provided the following information:

The Sales Manager has projected the following sales:

• January 6,000 units
• February 5,000 units
• March 6,000 units
• Projected selling price is $40.00/unit.

Your Production Manager gave the following information:

• Ending Inventory is to be 20% of next months production need **rounded to the nearest 10.
• Aprils Projected Sales 5,500 units, May 11250 units
• December 20X5 Ending Inventory was 1,000 units.

The Manufacturing Manager has estimated the following:

• Each unit will require 4 grams of material
• Material in Ending Inventory is 20% of next months needs
• Decembers Ending Material Inventory was 4,800 g
• Project cost of material: $2.50/gram

The Personnel Manager has estimated that Direct Labour will be projected at:

• 0.75 hours of Direct Labour per unit
• Direct Labour Cost: $8.50/hour

The Facilities Manager has estimated that the Manufacturing Overhead will be

projected at:

• Variable Overhead Rate to be $8 per Direct Labour hours
• Fixed Overhead Rate to be $3,000 per month

The Accounting Department Manager has provided the following information:

Selling and Administrative Expenses are projected to be a monthly cost of:

• Salaries $6,000
• Rent $1,500
• Advertising $1,100
• Telephone $300
• Other $500

Cash Receivable:

o Decembers Sales were $10,000

o 80% of sales is collected in the month in which they were made

o 20% of sales collected in the following month in which they were made

o Bad Debts is negligible

Accounts Payable:

o 80% of Payables is paid for in the current month

o 20% of Payables is paid for in the following month

o Decembers Payables was $75,000

Federal Income Tax is estimated at 22% average.

UBS company:

o has a $20,000 cash balance for the beginning of January

o pays Dividends of $8,000 to be paid in March

o pays projected Federal Income tax in March

For the Master Budget, you are expected to prepare the following:

Cost of Goods Sold Budget

Selling & Administrative Expenses Budget

Production Budget

Direct Materials Budget plus a Schedule of Expected Cash Disbursements

Direct Labour Budget

Manufacturing Overhead Budget

Budgeted Income Statement plus a Budget of Collections of Accounts Receivable

Cash Budget