UG Printery Inc.

Balance Sheet

December $31,2023$ Assets

Cash $$160,000$

Accounts Receivable $$375,400$

Direct Materials Inventory

$12,800$ pounds x $$10\mathrm{.}75$ $$137,600$

Finished Goods Inventory

$(21,000$ units x $$14\mathrm{.}20)$ $$298,200$

Plant and Equipment $$1,500,000$

Less Accumulated Depreciation $ $450,000$ $$1,050,000$

Total Assets $$2,021,200$

Liabilities and Equity

Accounts Payable, purchases $$450,000$

Income taxes payable $101,200$

Stock $$740,000$

Retained earnings $$730,000$

Total Liabilities and Equity $$2,021,200$

The Printery makes diaries and expects to sell its products for $$50$ per unit in the first quarter but will increase the price by five per cent in every quarter thereafter for $2024.$ Based on these sales prices, estimated unit sales by quarter are:

Quarter Sales in Units

$140,500$

$245,200$

$355,000$

$460,400$

$540,500$

The Printery expects to collect $75\%$ of its sales revenue in the quarter of the sale and the remainder in the following quarter but based on experience it knows it will lose $5\%$ of the amount outstanding from the previous quarter due to non$-$payment.. The Printerys managers' plan also requires that quarterly ending inventory be $20\%$ of expected sales for the next quarter.

Materials Manufacturing Requirements per unit

Direct Materials $2$ pounds @$$1\mathrm{.}50$ per pounds $ $3\mathrm{.}00$

Direct Labour $0\mathrm{.}25$ hrs @$$20$ per hour $5\mathrm{.}00$

Variable overhead $$0\mathrm{.}60$ per direct labour dollar $3\mathrm{.}00$

$$11\mathrm{.}00$

Total fixed manufacturing overhead is expected to be $$130,300$ per quarter, $$30,000$ of which represents depreciation on plant and machinery. They also want ending direct inventory to be $40\%$ of the materials required for the next quarter. The desired ending direct materials ending inventory for the fourth quarter is thirty$-$four thousand pounds. Sixty per cent of the direct materials purchases are paid in the quarter of the purchase; $40\%$ is paid in the quarter after the purchase.

An analysis of selling and administrative costs indicates the following:

Sales commissions $10\%$ of sales dollars

Travel $5\%$ of sales dollars

Entertainment $2\%$ of sales dollars

Fixed selling and administrative expenses for each quarter are estimated as follows:

Salaries $$35,000$

Supplies $$15,000$

Advertising $$45,000$

These expenses are paid in the quarter incurred. UG Printery Inc. expects its income tax rate to be $30\%$ and all tases outstanding from the previous year must be paid at the end of the first quarter.

Required:

Using the data prepare the following for each quarter of $2024.$

$1.$ sales budget with cash collections $(3$ marks$)$

$2.$ production budget $(4$ marks$)$

$3.$ direct materials budget $(4$ marks$)$

$4.$ direct labour budget $(4$ marks$)$

$5.$ selling and administrative costs budget $(5$ marks$)$

$6.$ budgeted income statement $(5$ marks$)$