Waterways Continuing Problem 09 (Part Level Submission) Waterways Corporation is preparing its budget for the coming year, 2020. The first step is to plan for the first quarter of that coming year. The company has gathered information from its managers in preparation of the budgeting process. Sales Unit sales for November 2019 Unit sales for December 2019 Expected unit sales for January 2020 Expected unit sales for February 2020 Expected unit sales for March 2020 Expected unit sales for April 2020 Expected unit sales for May 2020 Unit selling price 112,000 102,000 113,000 112,000 115,000 125,000 136,000 $12 Waterways likes to keep 10% of the next month's unit sales in ending inventory. All sales are on account. 85% of the Accounts Receivable are collected in the month of sale, and 15% of the Accounts Receivable are collected in the month after sale. Accounts receivable on December 31, 2019, totaled $183,600. Direct Materials Direct materials cost 80 cents per pound. Two pounds of direct materials are required to produce each unit. Waterways likes to keep 5% of the materials needed for the next month in its ending inventory. Raw Materials on December 31, 2019, totaled 11,290 pounds. Payment for materials is made within 15 days. 50% is paid in the month of purchase, and 50% is paid in the month after purchase. Accounts Payable on December 31, 2019, totaled $103,590. Direct Labor Labor requires 12 minutes per unit for completion and is paid at a rate of $9 per hour. per labor hour per labor hour per labor hour per labor hour Manufacturing Overhead Indirect materials 304 Indirect labor 50 Utilities 40 Maintenance 30 Salaries $42,000 Depreciation $16,200 Property taxes $2,400 Insurance $1,300 Maintenance $1,400 per month per month per month per month per month Selling and Administrative Variable selling and administrative cost per unit is $1.50. Advertising $17,000 a month Insurance $1,600 a month Salaries $71,000 a month Depreciation $2,700 a month Other fixed costs $2,900 a month Other Information The Cash balance on December 31, 2019, totaled $101,000, but management has decided it would like to maintain a cash balance of at least $700,000 beginning on January 31, 2020. Dividends are paid each month at the rate of $2.30 per share for 5,080 shares outstanding. The company has an open line of credit with Romney's Bank. The terms of the agreement requires borrowing to be in $1,000 increments at 9% interest. Waterways borrows on the first day of the month and repays on the last day of the month. A $530,000 equipment purchase is planned for February. (a) Your answer is correct. For the first quarter of 2020, prepare a sales budget. WATERWAYS CORPORATION Sales Budget For the First Quarter of 2020 First Quarter February January March Quarter Expected Unit Sales 113000 112000 115000 340000 12 Unit Selling Price 12 12 12 Total Sales 1356000 1344000 1380000 4080000 Click if you would like to Show Work for this question: Open Show Work For the first quarter of 2020, prepare a production budget. WATERWAYS CORPORATION Production Budget For the First Quarter of 2020 First Quarter February March January Quarter Expected Unit Sales 113000 112000 115000 X x Add Desired Ending Finished Goods Unit X Total Required Units X Less Beginning Finished Goods Unit 11300 11200 115000 Click if you would like to Show Work for this question: Open Show Work