Waterways Continuing Problem 09

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		112,000
Unit sales for December 2019		102,000
Expected unit sales for January 2020		113,000
Expected unit sales for February 2020		112,000
Expected unit sales for March 2020		115,000
Expected unit sales for April 2020		125,000
Expected unit sales for May 2020		136,000
Unit selling price		$12

Waterways likes to keep 10% of the next months 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.

Manufacturing Overhead
Indirect materials		30		per labor hour
Indirect labor		50		per labor hour
Utilities		40		per labor hour
Maintenance		30		per labor hour
Salaries		$42,000		per month
Depreciation		$16,200		per month
Property taxes		$2,400		per month
Insurance		$1,300		per month
Maintenance		$1,400		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 Romneys 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.

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 January February March Quarter TE T Expected Unit Sales | 113000 112000 115000 T 340000 Unit Selling Price Total Sales 6000 1344000 1380000 4080000 Your answer is partially correct. Try again. For the first quarter of 2020, prepare a production budget. WATERWAYS CORPORATION Production Budget For the First Quarter of 2020 A1 First Quarter January February March Quarter Expected Unit Sales 1 113000 112000 T 115000 Add Desired Ending Finished Goods Unit A 11200 T 11500 12500 Total Required Units Total Required Units 124200 12420 123500 126300 Les Beginning Finished Goods Unit 11300 11200 11500 Required Production Units Required Production Units 112900) 112300 114800 340000 Direct Materials Budget For the First Quarter of 2020 First Quarter February March January Quarter Units to be produced T 112900 112300 114800 Units to be produced X Direct Materials Per Unit 225800 224600 229600 Desired Ending Inventory 11290 Total Materials Required Less 4.1 Beginning Materials Inventory ODBODEODO A 11380 11230 11480 Direct Materials Per Unit Cost Per Pound Total Cost of Direct Materials Purchases For the first quarter of 2020, prepare a direct labor budget. (Round time per unit to nearest hour, e.g. 30 minutes will be rounded to 0.5 hours) WATERWAYS CORPORATION Direct Labor Budget x For the First Quarter of 2020 First Quarter January February March Quarter Units to be produced 11 Donn 112900 112300 116000 T 341200 Direct Labor Time (Hours) Per Unit T Total Required Direct Labor Hours 22580 22460 22460 23200 68240 Direct Labor Cost Per Hour Total Direct Labor Cost or cost 203220 202 208800 614160 $ For the first quarter of 2020, prepare a manufacturing overhead budget. (Round overhead rate to 2 decimal places, e.g. 5.25 and all other answers to 0 dec 2,520. List Variable Costs first.) WATERWAYS CORPORATION Manufacturing Overhead Budget For the First Quarter of 2020 First Quarter January February March Quarter x Direct Labor Hours Direct Labor Hours Variable Costs Indirect Materials Indirect Labor Utilities Maintenance Total Variable Cost Fixed Costs Salaries Depreciation Property Taxes Obittico Maintenance * T Total Fixed Costs Total Fixed Costs * Total Manufacturing Overhead * Total Manufacturing Overhead * Predetermined overhead rate for the quarter A For the first quarter of 2020, prepare a selling and administrative budget. (Enter per unit expenses rounded to 2 decimal places. E.g. 1.25) WATERWAYS CORPORATION Selling and Administrative Expense Budget For the Month Ending March 2020 First Quarter January February March Quarter Budget Sales In Units X Variable Expenses Per Unit Total S & A Expenses Total Variable S & A Expense Fixed Expenses Advertising Salaries Other Total Variable S & A Expense 4 Fixed Expenses Advertising Salaries Other Depreciation Total S & A Expenses Total S & A Expenses [X] your answer is incorrect. Try again. For the first quarter of 2020, prepare a schedule for expected cash collections from customers. Schedule of Expected Collections from Customers January February March Quarter Accounts receivable, 12/31/19 January sales February sales 20000 March sales Total cash collections X] your answer is incorrect. Try again. For the first quarter of 2020, prepare a schedule for expected payments for materials purchases. (Round answers to 0 decimal places, e.g. 2,520.) Schedule of Expected Cash Payments for Purchases January February March Quarter Accounts payable, 12/31/19 January RUKEL OOOO XPX February March Total payments For the first quarter of 2020, prepare a cash budget. (Round answers to 0 decimal places, e.g. 2,520.) WATERWAYS CORPORATION Cash Budget For the First Quarter of 2020 First Quarter January ) February March Quarter Beginning Cash Balance Add 22. Receipts Collections From Customers Total Available Cash 7 Less 2.1 Disbursements Less 4 Disbursements Direct Materials Direct Labor Direct Labor Manufacturing Overhead Selling And Administrative Equipment Purchase TODDOLI I ] Total Disbursements T Excess (Deficiency) Of Available Cash Over Cash Disbursements A Financing T Add AIT Borrowings T Less Repayments o x Repayments Repayments T Total Available Cash DOO Ending Cash Balance