Waterways Continuing Problem (This is a continuation of the Waterways Problem from Chapters 1 through 8.) WCP9 Waterways Corporation is preparing its budget for the coming year, 2014. The first step is to plan for the first quarter of that coming year. Waterways gathered the fol- lowing information from the managers. Sales 112.500 102.100 113,000 Unit sales for November 2013 Unit sales for December 2013 Expected unit sales for January 2014 Expected unit sales for February 2014 Expected unit sales for March 2014 Expected unit sales for April 2014 Expected unit sales for May 2014 Unit selling price 112.500 116.000 125,000 137,500 $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 receiv- able on December 31, 2013, totaled $183,780. Direct Materials Amount Used per Unit Inventory, Dec. 31 Item 5,177.5 Ibs 3,883.125 lbs 1.294.375 lbs Metal Plastic Rubber 1 lb@ 58e per Ib. 12 oze 6e per oz 4 ez@ 5e per oz 10.355.0 lbs 2 lbs per unit Metal, plastic, and rubber together are 75e per pound per unit. Waterways likes to keep 5%e 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, 2013, totaled $120,595. Raw Materials on December 31, 2013. 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 Indirect labor Utilities Maintenance Salaries Depreciation Property taxes Insurance 30e per labor hour 50e per labor hour 45e per labor hour 25e per labor hour $42,000 per month $16,800 per month $ 2,675 per month $ 1,200 per month $ 1,300 per month Janitorial Selling and Administrative Variable selling and administrative cost per unit is $1.60. Advertising Insurance Salaries Depreciation Other fixed costs $15,000 a month $ 1,400 a month $72,000 a month $ 2.500 a month $ 3,000 a month Waterways Continuing Other Information The Cash balance on December 31, 2013, totaled $100,500, but management has decided it would like to maintain a cash balance of at least $800,000 beginning on January 31, 2014. 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 $500,000 equipment purchase is planned for February. Instructions For the first quarter of 2014, do the following. (a) Prepare a sales budget. (b) Prepare a production budget. (c) Prepare a direct materials budget. (Round to nearest dollar) (d) Prepare a direct labor budget. (For calculations, round to the nearest hour) (e) Prepare a manufacturing overhead budget. (Round amounts to the nearest dollar) (n Prepare a selling and administrative budget. (g) Prepare a schedule for expected cash collections from customers. (h) Prepare a schedule for expected payments for materials purchases. (Round totals to nearest dollar) (i) Prepare a cash budget. Chapter 9 Waterways Continuing Problem Waterway Corporation Sales Budget For the First Quarter of 20x First Quarter Quarter March January February Expected unit sales Title Formula Value Value Value Cell Reference Cell Reference Formula Cell Reference Value Title Formula Formula Formula Waterway Corporation Production Budget For the First Quarter of 20cx First Quarter February Cell Reference Quarter January Cell Reference March Title Cell Reference Formula Title Value Value Value Cell Reference Total required units Title Formula Cell Reference Formula Formula Formula Cell Reference Formula Cell Reference Title Formula Formula Formula Formula Waterway Corporation Direct Materials Budget For the First Quarter of 20x First Quarter January Cell Reference February Cell Reference Value Formula March Quarter Formula Units to be produced Cell Reference Value Title Value Value Total pounds needed for production Formula Formula Formula Title Value Value Value Cell Reference Total materials required Title Formula Formula Cell Reference Formula Cell Reference Formula Cell Reference Value Title Formula Formula Formula Tale Formula Value Value Value Total Cost of direct materials purchases Value Formula Formula Formula Formula Waterway Corporation Direct Labor Budget For the First Quarter of 201ox First Quarter Quarter March February Cell Reference January Cell Reference Formula Cell Reference Title Value Value Value Title Value Formula Formula Formula Total required direct labor-hours Formula Value Value Title Value Value Formula Formula Total direct labor costs Formula Formula Waterway Corporation Manufacturing Overhead Budget For the First Quarter of 20x First Quarter Quarter March February January Variable Costs Formula Formula Formula Title Formula Formula Formula Title Formula Formula Formula Formula Formula Formula Formula Formula Ttle Formula Formula Title Formula Formula Title Fixed Costs Formula Formula Cell Reference Formula Cell Reference Title Value Formula Formula Title Value Cell Reference Cell Reference Cell Reference Title Value Cell Reference Title Value Cell Reference Cell Reference Formula Cell Reference Cell Reference Formula Formula Title Value Formula Fixed manufacturing overhead Formula Formula Formula Formula Title Formula Formula Total manufacturing overhead Cell Reference Cell Reference Cell Reference Cell Reference Formula Cell Reference Cell Reference Cell Reference Direct labor hours Predetermined overhead rate for the quarter Formula Waterway Corporation Selling and Administrative Expense Budget For the First Quarter of 200x First Quarter January Cell Reference February Cell Reference March Quarter Formula Cell Reference Formula Budget sales in units Title Cell Reference Cell Reference Value Cell Reference Formula Title Formula Formula Fixed expenses Title Value Value Cell Reference Cell Reference Cell Reference Cell Reference Formula Title Formula Title Value Cell Reference Cell Reference Formula Formula Formula Title Value Cell Reference Cell Reference Cell Reference Cell Reference Title Value Title Formula Formula Formula Formula Formula Total S&A expenses Formula Formula Formula Schedule of Expected Collections from Customers February March January Accounts Receivable, 12/31/13 Title Value Formula Formula Title Formula Formula Title Formula Total cash collections Formula Formula Formula Schedule of Expected Payment for Direct Materials January Quarter March February Accounts Payable, 12/31/13 Formula Value Formula Title Formula Formula Title Title Formula Formula Formula Formula Formula Total payments Formula Formula Formula Formula Waterway Corporation Cash Budget For the First Quarter of 20xcx First Quarter January Value February Cell Reference March Quarter Beginning cash balance Add: Receipts Title Cell Reference Cell Reference Cell Reference Cell Reference Cell Reference Formula Total available cash Formula Formula Formula Formula Less: Disbursements Title Title Formula Formula Formula Formula Cell Reference Cell Reference Cell Reference Formula Formula Formula Title Formula Formula Title Formula Formula Formula Formula Equipment Purchase Value Formula Cell Reference Title Value Cell Reference Formula Total disbursements Excess (deficiency) of available cash over cash Formula Formula Formula Formula Formula disbursements Formula Formula Formula Financing Title Value Formula Cell Reference Title Formula Interest Formula Formula Ending cash balance Formula Formula Formula Formula