Waterways Continuing Problem 23

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		112,500
Unit sales for December 2016		102,100
Expected unit sales for January 2017		113,000
Expected unit sales for February 2017		112,500
Expected unit sales for March 2017		116,000
Expected unit sales for April 2017		125,000
Expected unit sales for May 2017		137,500
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, 2016, totaled $183,780.

Direct Materials
Item		Amount Used per Unit		Inventory, Dec. 31
Metal		1 lb @ 58 per lb.		5,177.5 lbs
Plastic		12 oz @ 6 per oz		3,883.125 lbs
Rubber		4 oz @ 5 per oz		1,294.375 lbs
		2 lbs per unit		10,355.0 lbs

Metal, plastic, and rubber together are 75 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. 50% is 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.

Manufacturing Overhead
Indirect materials		30		per labor hour
Indirect labor		50		per labor hour
Utilities		45		per labor hour
Maintenance		25		per labor hour
Salaries		$42,000		per month
Depreciation		$16,800		per month
Property taxes		$2,675		per month
Insurance		$1,200		per month
Maintenance		$1,300		per month

Selling and Administrative
Variable selling and administrative cost per unit is $1.60.
Advertising		$15,000	a month
Insurance		$1,400	a month
Salaries		$72,000	a month
Depreciation		$2,500	a month
Other fixed costs		$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 Romneys 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 $500,000 equipment purchase is planned for February.

Your answer is partially correct. Try again. For the first quarter of 2017, prepare a cash budget. (Round answers to 0 declmal places, e.g. 2,520. Do not leave any answer fleld blank. Enter o for amounts.) WATERWAYS CORPORATION Cash Budget For the First Quarter of First Quarter March January February Quarter 1,136,392 100500 Beginning Cash Balance 100500 900095 Add Receipts s From Customers 1336380 135090O 1385700 40729B0 Total Available Cash 1436880 2150995 2186310 4173480 Less.T Disbursements Direct Materials 205304 169498 172815 547617 548320 Direct Labor 180720 180560 187040 Purchase 500000 500000 Selling And Administrative 272200 271400 277000 820600 Dividends 12500 12500 37500 12500 Manufacturing Overhead 81031 82245 244337 Total Disbursements 51785 1214989 31600 2698374 Excess (Deficiency) of Available Cash Over Cash Disbursements 685095 936006 1474340 1475108 Financing Add Borrowings 115000 115000 115000 115000 Repayments 4620 Interest 4620 Ending Cash Balance 800095 1,136,397 1,954,144 1474341