Using the following information, you are to prepare a comprehensive budget for Breathe Deep. The Company, Breathe Deep, assembles a specialized device used to help people breath without being intubated. Arrangements have been made for the component parts (bundled in packets; one packet is used to assemble one unit) to be produced in Morocco, shipped to Boise, then assembled and sold by Breathe Deep to the end users.

You have developed the prototypes, established a market, and now you are putting together a budget for the first three months of operations. The Company will start manufacturing and distribution on January 1, 20xx. No expenses occur nor does cash leave the company before January 1, 20xx.

This project is to be completed in EXCEL using the template provided. It is expected that you will you add lines, columns, and formatting to make the documents look professional. The schedules/statements HAVE TO BE interactive (linked) as your boss will make a change to your file from the Key Factors tab. The project is to be submitted electronically as a group via Canvas.

You are to prepare a Proforma Income Statement, Proforma Cash Budget, and Proforma Balance Sheet for the individual months of January, February, and March, and for the quarter ending March 31, 20xx. At times it will be necessary to hide columns and side calculations. All formatting has been erased and should be added as you work through the schedules. Example: You will often need to calculate April’s numbers to figure out March’s calculation but I do not want to see April.

Use the following assumptions in making your budget calculations:

a. Assume all 12 months have 30 days to make the calculations easier. This is commonly done in the business world.

b. Projected sales in units are 1680 in January and increase by 265 units each month through the remainder of the year.

c. Sales price includes COST PLUS AN ADDITIONAL 150% OF COST (cost includes raw material, direct labor and overhead). All sales are on account and are collected 30% in the month of sale, 30% in the next month, and 20% in the second following month. The remaining accounts receivable are uncollectible and recorded as bad debt expense IN THE MONTH OF SALE.

d. The company wants to have at least 40% of the next month’s projected sales in ending finished goods inventory on hand. (Since the company is just starting, beginning January finished good will be zero.)

e. At the start of each month, management plans to have enough packets of raw materials on hand to cover the next 30 days’ production requirements. Each packet of raw material costs $130.00. The company will have 2510 packets on hand on January 1, 20xx. ALL RAW MATERIALS PACKETS PURCHASED DURING LATE DECEMBER HAVE NOT BEEN PAID. Raw materials are payable on the 10th day of the month after the purchase.

f. Five hours of direct labor are required to assemble each device. The direct labor cost (including fringe benefits) is $22.00 per hour. Wages earned by employees during the first half of each month are paid on the third Friday of the current month. Wages earned in the second half of the month are paid on the first Friday of the next month. Assume that the workforce is stable each month (hence, wages and salaries are the same every day of the month).

g. Manufacturing overhead incurred averages 80% of direct labor cost. Manufacturing overhead percentage includes warehouse rent, insurance, utilities, etc. Manufacturing overhead is paid 30% in the current month with the remaining balance paid the following month.

h. Sales commissions are 16% of sales price. 100% of sales commissions are payable on the 15th day of the month after the sale.

i. Administrative salaries and fringe benefits are $60,000 per month. Administrative salaries are paid one-half on the third Friday of the current month and one-half is on the first Friday of the next month.

j. Rent on administrative office space is $10,000 per month. Rent for each month is due on the first day of each month.

k. On January 1, 20xx the Company will pay an $84,000 annual insurance liability premium covering January through December, 20xx. This insurance policy is a different policy than MOH insurance.

l. Other administrative expenses are estimated to be 7.5% of sales. Other administrative expenses are paid in the month after the expense occurs.

m. The federal and state income tax rate is estimated at 25%. Taxes accrue on each month’s income and will be paid quarterly on April 15, July 15, etc. Note: Your company is successful, and YOU WILL NEED TO PAY TAXES.

n. The company has a $1,000,000 line of credit secured to its inventory and accounts receivable through a private investor. Borrowing against this line must be in increments of $50,000 and happen on the 15th day of the month. Repayments must also occur in $50,000 increments on the 15th day of the month. Your borrowings and repayments should be adjusted to provide a minimum ending cash balance of $15,000 each month.

o. Interest for the line of credit is calculated at an annual rate of 6% assuming a 360 year. Interest expense is payable on the 1st day of the month after the borrowing occurred. .

p. Beginning cash balance on January 1, 20xx is projected to be $190,000. This money was raised through issuing common stock and should be recorded accordingly.

Check Figures:

January, Sales: $1,377,600

January, Operating Income: $150,304

January, Net Income: $112,541

January, Total Budget Disbursements: $650,381

January, Ending Cash: $52,899

January, Total Assets: $1,340,513

February, Total Assets: $1,771,241

March, Total Assets: $2,008,668

Excel tab sections are: income statement, cash budget, balance sheet, schedules, sales, production, raw material, direct labor, manufacturing overhead, COGS, selling & admin, note/interest/tax, stockholder's equity