Waterways Continuing Problem-10 (Part Level Submission) Other Information 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 The Cash balance on March 31 will be $145,000, but Waterways has decided it would like to maintain a cash balance and Alberta. Because the budget prepared by the plant was incomplete, Jordan Leigh, Waterways' CFO, was sent to of at least $500,000 beginning on April 30. The company has an open line of credit with its bank. The terms of the B.C. to oversee the plant's budgeting process for the second quarter of 2017. 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. Assume interest is paid at the end of the quarter. Jordan asked the various managers to collect the following information for preparing the second-quarter budget. In May, $680,000 of new equipment to update operations will be purchased. Sales Unit sales for February 2017 92,000 Three months' insurance is prepaid on the first day of the first month of the quarter. Unit sales for March 2017 104,000 Expected unit sales for April 2017 112,000 Expected unit sales for May 2017 117,000 For the second quarter of 2017, prepare a direct materials budget. (Round cost per kg to 2 decimal places, e.q. 122,000 0.25 and all other answers to 0 decimal places, e.g. 2,520.) Expected unit sales for June 2017 Expected unit sales for July 2017 137,000 WATERWAYS CORPORATION Expected unit sales for August 2017 162,000 British Columbia Production Plant Average unit selling price $13 Direct Materials Budget for the 2nd Quarter, 2017 April May June Total Based on the experience from the home plant, Jordan has suggested that the B.C. plant keep 20% 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 from 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 material on March 31 consisted of 27,120 kg. This plant likes to keep 20% 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 $125,400. Direct Labour 17071 1.1010 Labour requires 15 minutes per unit for completion and is paid at an average rate of $16 per hour. Manufacturing Overhead Indirect materials $0.40 per labour hour Indirect labour $0.60 per labour hour Utilities $0.60 per labour hour Maintenance $0.40 per labour hour Salaries $44,000 per month Depreciation $14,200 per month Property taxes $2,000 per month Insurance $1,450 per month Janitorial $2,200 per month Selling and Administrative Variable selling and administrative cost per unit is $1.40. Advertising $12,000 a month Depreciation $2,800 a month Insurance $1,100 a month Other fixed costs $3,600 a month Salaries $62,000 a month
