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 $2017.$

Jordan asked the various managers to collect the following information for preparing the second$-$quarter budget.

Sales

Unit sales for February $201792,000$

Unit sales for March $2017104,000$

Expected unit sales for April $2017112,000$

Expected unit sales for May $2017117,000$

Expected unit sales for June $2017122,000$

Expected unit sales for July $2017137,000$

Expected unit sales for August $2017162,000$

Average unit selling price $$12$

Based on the experience from 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 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 $1\mathrm{.}00$ kg$.$ Metal, plastic, and rubber together amount to $$1\mathrm{.}50$ per kg$.$ Inventory of combined direct material on March $31$ consisted of $11,250$ 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 $$123,600.$

Direct Labour

Labour requires $15$ minutes per unit for completion and is paid at an average rate of $$12$ per hour.

Manufacturing Overhead

Indirect materials $$0\mathrm{.}50$ per labour hour

Indirect labour $$0\mathrm{.}40$ per labour hour

Utilities $$0\mathrm{.}60$ per labour hour

Maintenance $$0\mathrm{.}30$ per labour hour

Salaries $$43,200$ per month

Depreciation $$14,400$ per month

Property taxes $$2,150$ per month

Insurance $$1,050$ per month

Janitorial $$2,700$ per month

Selling and Administrative

Variable selling and administrative cost per unit is $$1\mathrm{.}60.$

Advertising $$12,000$ a month

Depreciation $$2,500$ a month

Insurance $$1,200$ a month

Other fixed costs $$3,900$ a month

Salaries $$65,000$ a month

Other Information

The Cash balance on March $31$ will be $$116,000,$ but Waterways has decided it would like to maintain a cash balance of at least $$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 $4\%$ 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.

In May, $$840,000$ 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.