Water Play, Inc. Part 2-Constant Demand and Seasonal Budgets 1. The company has decided they needed to create a full set of budget schedules including financial statements for the first year of operations based on an assumption of constant demand of 18,000 quarterly and 72,000 for the first year (appendices B-1 through B-11). A second set of budget schedules and financial statements based on expected unit sales of 15,000 in quarter one, 25,000 in quarter two, 20,000 in quarter three, and finally 12,000 in quarter four for a total of 72,000 for the year based on a seasonal demand pattern (appendices C-1 through C-11). We expect the same quarterly sales patterns in year two meaning 18,000 units per quarter under constant demand and 15,000 units in quarter one under seasonal demand. Compare the constant demand to the seasonal demand budget. Explain the major differences in each of the budget schedules, cash budget and financial statements on both a quarterly and annual basis. Remember the beginning and ending raw material and finished goods inventory units will cause differences in the budgets but also focus on the differences between accrual and cash timing figures.Appendix BZ Water Play, 1m:- Annual Year 2 Unit Sales 18,000 18,000 72,000 18,000 Selling Price per unit 30,000 30,000 3 0,000 Total Sales Revenue 540,000,000 $ 540,000,000 540,000,000 31% 540,000,000 53 2,160,000,000 Cash Collections Schedule Beginning AIR balance 0 - Q1 collection of Q1 sales 361,800,000 361,800,000 Q2 collection of Q2 sales 361,800,000 361,800,000 Q3 collection of Q2 sales 175,500,000 175,500,000 Q3 collection of Q3 sales 361,800,000 361,800,000 Total Cash Collections by Q'm 361,800,000 35 537,300,000 537,300,000 35 537,300,000 $ 1,973,700,000 EndingAfR $ 175,500,000 Bad Debts Expense _ E 10,800,000 Collection in quarter of sale Collection in quarter following sale 67.0% Sales BudgetPart 2 325% January 1, 20XX Annual Year 2 72,000 15,000 Selling Price per unit 30,000 30, 000 30, 000 30, 000 30,000 Total Sales Revenue $ 450,000,000 5 2,160,000,000 Cash Collections Schedule -- . Q1 collection of Q1 sales 301,500,000 301,500,000 Q2 collection of Q2 sales 502,500,000 502,500,000 402,000,000 Q4 collection of Q3 sales 195,000,000 195,000,000 10,200,000 Appendix B-6 Water Play, Inc. Manufacturing Overhead Budget--Part 2 January 1, 20XX Annual Year 2 Q1 Q2 Q3 Q4 Total Q1 Direct Labor Hours for Units Produced 1,620,000 1,620,000 1,620,000 1,620,000 6,480,000 VO/H Rate per DLH $ 53.24 $ 53.24 $ 53.24 $ 53.24 $ 53.24 Total Variable Overhead 86,250,000 86,250,000 86,250,000 86,250,000 345,000,000 Total Fixed Overhead 55,350,000 55,350,000 55,350,000 55,350,000 221,400,000 Total Overhead 141,600,000 141,600,000 141,600,000 141,600,000 566,400,000 Less: Depreciation 5,350,000 5,350,000 5,350,000 5,350,000 21,400,000 Cash Mfg. O/H costs 136,250,000 136,250,000 136,250,000 136,250,000 545,000,000Appendix C-6 Water Play, Inc. Manufacturing Overhead Budget--Part 2 January 1, 20XX Annual Year 2 Q1 02 Q3 04 Total Q1 Direct Labor Hours for Units Produced 1,440,000 2,205,000 1,728,000 1,107,000 6,480,000 VO/H Rate per DLH $ 53.24 $ 53.24 $ 53.24 $ 53.24 $ 53.24 Total Variable Overhead 76,666,667 117,395,833 92,000,000 58,937,500 345,000,000 Total Fixed Overhead 55,350,000 55,350,000 55,350,000 55,350,000 221,400,000 Total Overhead 132,016,667 172,745,833 147,350,000 114,287,500 566,400,000 Less: Depreciation 5,350,000 5,350,000 5,350,000 5,350,000 21,400,000 Cash Mfg. O/H costs 126,666,667 167,395,833 142,000,000 108,937,500 545,000,000Appendix B-7 Water Play, Inc. Selling and General Administrative Budget January 1, 20XX Annual Year 2 Q1 Q2 Q3 Q4 Total Q1 Units sold 18,000 18,000 18,000 18,000 72,000 18,000 Variable SG&A cost / unit $ 2,400.00 $ 2,400.00 $ 2,400.00 $ 2,400.00 $ 2,400.00 Total Variable SG&A cost 43,200,000 43,200,000 43,200,000 43,200,000 172,800,000 Total Fixed SG&A cost 90,937,500 90,937,500 90,937,500 90,937,500 363,750,000 Total SG&A cost 134,137,500 134,137,500 134,137,500 134,137,500 536,550,000 Less: Depreciation 1,037,500 1,037,500 1,037,500 1,037,500 4,150,000 Cash SG&A costs 133,100,000 133,100,000 133,100,000 133,100,000 532,400,000Appendix C-7 Water Play, Inc. Selling and General Administrative Budget January 1, 20XX Annual Year 2 Q1 Q2 Q3 Total Q1 Units sold 15,000 25,000 20,000 12,000 72,000 15,000 Variable SG&A cost / unit $ 2,400.00 $ 2,400.00 $ 2,400.00 $ 2,400.00 $ 2,400.00 Total Variable SG&A cost 36,000,000 60,000,000 48,000,000 28,800,000 172,800,000 Total Fixed SG&A cost 90,937,500 90,937,500 90,937,500 90,937,500 363,750,000 Total SG&A cost 126,937,500 150,937,500 138,937,500 119,737,500 536,550,000 Less: Depreciation 1,037,500 1,037,500 1,037,500 1,037,500 4,150,000 Cash SG&A costs 125,900,000 149,900,000 137,900,000 118,700,000 532,400,000