Waterways Continuing Problem 10 a-i Waterways Corporation has recently acquired a small manufacturing operation in British Columbia that produces one of its more popular items. This plant will provide these units for resale in retail hardware stores in British Columbia and Alberta. Because the budget prepared by the plant was incomplete, Jordan Leigh, Waterways' CFO, was sent to B.C. to oversee the plant's budgeting process for the second quarter of 2021. Jordan asked the various managers to collect the following information for preparing the second-quarter budget. Sales Unit sales for February 2021 Unit sales for March 2021 Expected unit sales for April 2021 Expected unit sales for May 2021 Expected unit sales for June 2021 Expected unit sales for July 2021 Expected unit sales for August 2021 Average unit selling price $95,000 107,000 115,000 120,000 125,000 140,000 165,000 $14 Based on the experience in the home plant, Jordan has suggested that the B.C. plant keep 10% of the next month's unit sales in ending inventory. The plant has contracts with some of the major home hardware giants, so all sales are on account; 50% of the accounts receivable is collected in the month of sale, and the balance is collected in the month after sale. This was the same collection pattern as the previous year. The new plant has no bad debts. Direct Materials The combined quantity of direct materials (consisting of metal, plastic, and rubber) used in each unit is 1.20 kg. Metal, plastic, and rubber together amount to $1.50 per kg. Inventory of combined direct materials on March 31 consisted of 13,860 kg. This plant likes to keep 10% of the materials needed for the next month in its ending inventory. Fifty percent of the payables is paid in the month of purchase, and 50% is paid in the month after purchase. Accounts payable on March 31 will total $127,200. Direct Labour Labour requires 15 minutes per unit for completion and is paid at an average rate of $20 per hour. Manufacturing Overhead Indirect materials $0.30 Indirect labour $0.50 Utilities $0.40 Maintenance $0.40 Salaries $44,600 Depreciation $15,200 Property taxes $2,150 Insurance $1,050 Janitorial $2,600 per labour hour per labour hour per labour hour per labour hour per month per month per month per month per month Selling and Administrative Variable selling and administrative expenses per unit are $1.60. Advertising $ 16,000 a month Depreciation $2,000 a month Insurance $1,500 a month Other fixed costs $3,300 a month Salaries $69,000 a month Other Information The cash balance on March 31 will be $135,500, but Waterways has decided it would like to maintain a cash balance of at least $500,000 beginning on April 30. The company has an open line of credit with its bank. The terms of the agreement require borrowing to be in $1,000 increments at 3% interest. Borrowing is considered to be on the first day of the month and repayments are on the last day of the month. It pays interest only on the portion of the loan that it repays in a month. In May, $890,000 of new equipment to update operations will be purchased. Three months' insurance is prepaid on the first day of the first month of the quarter. For the second quarter of 2021, prepare a sales budget. WATERWAYS CORPORATION British Columbia Production Plant Sales Budget for the 2nd Quarter, 2021 April June May Total Sales in units Per unit selling price $ $ $ $ Total expected sales $ For the second quarter of 2021, prepare a schedule for expected cash collections from customers. WATERWAYS CORPORATION British Columbia Production Plant Expected Cash Collections for the 2nd Quarter, 2021 April May June Total Collections from March $ $ April April May May June Total cash collections $ $ For the second quarter of 2021, prepare a production budget. WATERWAYS CORPORATION British Columbia Production Plant Production Budget for the 2nd Quarter, 2021 April May June Total For the second quarter of 2021, prepare a direct materials budget. (Round cost per kg to 2 decimal places, e.g. 0.25 and all other answers to 0 decimal places, e.g. 2,520.) WATERWAYS CORPORATION British Columbia Production Plant Direct Materials Budget for the 2nd Quarter, 2021 April May June Total $ $ $ $ $ $ $ For the second quarter of 2021, prepare a schedule for expected payments for materials purchases. (Round answers to 0 decimal places, e.g. 2,520.) WATERWAYS CORPORATION British Columbia Production Plant Expected DM Cash Disbursements for the 2nd Quarter, 2021 April May June Total Disbursements from March $ $ $ $ April April May May June Total payments $ For the second quarter of 2021, prepare a direct labour budget. (Round time per unit to 2 decimal places, e.g. 5.25.) WATERWAYS CORPORATION British Columbia Production Plant Labour Budget for the 2nd Quarter, 2021 April May June Total $ $ $ $ $ $ $ $ For the second quarter of 2021, prepare a manufacturing overhead budget. (Round variable overhead rate to 2 decimal places, e.g. 5.25 and all other answers to 0 decimal places, e.g. 2,275.) WATERWAYS CORPORATION British Columbia Production Plant Manufacturing Overhead Budget for the 2nd Quarter, 2021 April May June Total $ $ $ $ > $ $ For the second quarter of 2021, prepare a selling and administrative expenses budget. (Enter per unit expenses rounded to 2 decimal places, e.g. 1.25.) WATERWAYS CORPORATION British Columbia Production Plant Selling and Administrative Budget for the 2nd Quarter, 2021 April May June Total $ $ A $ $ $ $ $ WATERWAYS CORPORATION British Columbia Production Plant Cash Budget for the 2nd Quarter, 2021 April May June Total $ $ $ $ $ $ $