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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
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 BC to oversee the plants budgeting process for the second quarter of Jordan asked the various managers to collect the following information for preparing the secondquarter budget. Sales Unit sales for February Unit sales for March Expected unit sales for April Expected unit sales for May Expected unit sales for June Expected unit sales for July Expected unit sales for August Average unit selling price $ Based on the experience from the home plant, Jordan has suggested that the BC plant keep of the next months unit sales in ending inventory. The plant has contracts with some of the major home hardware giants, so all sales are on account; 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 kg Metal, plastic, and rubber together amount to $ per kg Inventory of combined direct material on March consisted of kg This plant likes to keep 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 is paid in the month after purchase. Accounts Payable on March will total $ Direct Labour Labour requires minutes per unit for completion and is paid at an average rate of $ per hour. Manufacturing Overhead Indirect materials $ per labour hour Indirect labour $ per labour hour Utilities $ per labour hour Maintenance $ per labour hour Salaries $ per month Depreciation $ per month Property taxes $ per month Insurance $ per month Janitorial $ per month Selling and Administrative Variable selling and administrative cost per unit is $ Advertising $ a month Depreciation $ a month Insurance $ a month Other fixed costs $ a month Salaries $ a month Other Information The Cash balance on March will be $ but Waterways has decided it would like to maintain a cash balance of at least $ beginning on April The company has an open line of credit with its bank. The terms of the agreement require borrowing to be in $ increments at 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, $ 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. prepare a cash budget
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 BC to oversee the plants budgeting process for the second quarter of
Jordan asked the various managers to collect the following information for preparing the secondquarter budget.
Sales
Unit sales for February
Unit sales for March
Expected unit sales for April
Expected unit sales for May
Expected unit sales for June
Expected unit sales for July
Expected unit sales for August
Average unit selling price $
Based on the experience from the home plant, Jordan has suggested that the BC plant keep of the next months unit sales in ending inventory. The plant has contracts with some of the major home hardware giants, so all sales are on account; 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 kg Metal, plastic, and rubber together amount to $ per kg Inventory of combined direct material on March consisted of kg
This plant likes to keep 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 is paid in the month after purchase.
Accounts Payable on March will total $
Direct Labour
Labour requires minutes per unit for completion and is paid at an average rate of $ per hour.
Manufacturing Overhead
Indirect materials $ per labour hour
Indirect labour $ per labour hour
Utilities $ per labour hour
Maintenance $ per labour hour
Salaries $ per month
Depreciation $ per month
Property taxes $ per month
Insurance $ per month
Janitorial $ per month
Selling and Administrative
Variable selling and administrative cost per unit is $
Advertising $ a month
Depreciation $ a month
Insurance $ a month
Other fixed costs $ a month
Salaries $ a month
Other Information
The Cash balance on March will be $ but Waterways has decided it would like to maintain a cash balance of at least $ beginning on April The company has an open line of credit with its bank. The terms of the agreement require borrowing to be in $ increments at 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, $ 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.
prepare a cash budget
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