Waterways Continuing Problem 21 (Part Level Submission) Waterways Corporation is preparing its budget for the coming year, 2017. The first step is to plan for the first quarter of that coming year. Waterways gathered the following information from the managers. Sales Unit sales for November 2016 Unit sales for December 2016 Expected unit sales for January 2017 113,000 Expected unit sales for February 2017 112,500 Expected unit sales for March 2017 Expected unit sales for April 2017 Expected unit sales for May 2017 Unit selling price 112,500 102,100 116,000 125,000 137,500 $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, 2016, totaled $183,780 Direct Materials Item Metal Plastic Rubber Amount Used per Unit Inventory, Dec. 31 5,177.5 bs 3,883.125 lbs 1,294.375 lbs 10,355.0 lbs 1 lb 58 per lb. 12 oz 6t per oz O25t per oz 2 lbs per unit Metal, plastic, and rubber together are 75t per pound per unit. Waterways likes to keep 5% of the materials needed for the next month in its ending inventory. Payment for materials is made within 15 days. S0% s paid in the month of purchase, and 50% is paid in the month after purchase. Accounts Payable on December 31, 2016, totaled $120,595. Raw Materials on December 31, 2016, totaled 11,295 pounds. Direct Labor Labor requires 12 minutes per unit for completion and is paid at a rate of $8 per hour. Indirect materials Indirect labor Utilities 0c per labor hour 50e per labor hour 45c per labor hour 25c per labor hour Salaries $42,000 per month 16,800 per month Property taxes Insurance $2 2,675 per month $1,200 per month $1,300 per month Selling and Administrative Variable selling and administrative cost per unit is $1.60 Advertising Insurance Salaries Depreciatio Other fixed costs $15,000 a month $1,400 a month $72,000 a month $2,500 a month $3,000 a month Other Information The Cash balance on December 31, 2016, totaled $100,500, but management has decided it would like to maintain a cash balance of at least $800,000 beginning on January 31, 2017. Dividends are paid each month at the rate of $2.50 per share for 5,000 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 8% interest. Waterways borrows on the first day of the month and repays on the last day of the month. A S500,000 equipment purchase is planned for February. For the First Quarter of 2017 First Quarter January February March Quarter Cash Balance 100500 100500 Add . Receipts 1336380 1350900 1385700 4072980 Total Available Cash 1436880 Less Direct Materials 205304 169498 172815 547617 Direct Labor 180720 180560 187040 548320 Equipment Purchase 500000 500000 Selling And Administrative 12500 12500 12500 37500 Total Excess (Deficiency) Of Available Cash Over Cash Add Less 115000 Interest Ending Cash Balance