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 $2023.$

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

Sales

Unit sales for February $2023$

Unit sales for March $2023$

Expected unit sales for April $2023$

Expected unit sales for May $2023$

Expected unit sales for June $2023$

Expected unit sales for July $2023$

Expected unit sales for August $2023$

Average unit selling price

$$99\mathrm{.}000$

$111,000$

$119\mathrm{.}000$

$124\mathrm{.}000$

$129,000$

$144,000$

$169,000$

$$12$

Based on the experience in 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 as 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 $1\mathrm{.}10$ kg$.$ Metal, plastic, and rubber together amount to $$1\mathrm{.}50$ per kg$.$ Inventory of combined direct materials on March $31$ consisted of $13,145$ 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 Based on the experience in 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 as 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 $1\mathrm{.}10$ kg$.$ Metal, plastic, and rubber together amount to $$1\mathrm{.}50$ per kg$.$ Inventory of combined direct materials on March $31$ consisted of $13,145$ 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 $$120,000.$

Direct Labour

Labour requires $15$ minutes per unit for completion and is paid at an average rate of $$14$ per hour.

Manufacturing Overhead

Indirect materials

Indirect labour

Utilities

Maintenance

Salaries

Depreciation

Property taxes

Insurance

Janitorial

$$0\mathrm{.}40$

$$0\mathrm{.}60$

$$0\mathrm{.}50$

$$0\mathrm{.}30$

$$43,800$

$$14,800$

$$2,450$

$$1,250$

$$2400$

per labour hour

per labour hour

per labour hour

per labour hour

per month

per month

per month

per month

ber monthManufacturing Overhead

Indirect materials

Indirect labour

Utilities

Maintenance

Salaries

Depreciation

Property taxes

insurance

Janitorial

$$0\mathrm{.}40$

$$0\mathrm{.}60$

$$0\mathrm{.}50$

$$0\mathrm{.}30$

$$43,800$

$$14,800$

$$2,450$

$$1,250$

$$2,400$

per labour hour

per labour hour

per labour hour

per labour hour

per month

per month

per month

per month

per month

Selling and Administrative

Variable selling and administrative expenses per unit are $$1\mathrm{.}60.$

Advertising

Depreciation

Insurance

Other fixed costs

Salaries

$$16,000$ a month

$$2,500$ a month

$$1,200$ a month

$$3,600$ a month

$$67,000$ a monthSelling and Administrative

Variable selling and administrative expenses per unit are $$1\mathrm{.}60.$

Advertising

Depreciation

Insurance

Other fixed costs

Salaries

$$16,000$ a month

$$2,500$ a month

$$1\mathrm{.}200$ a month

$$3,600$ a month

$$67,000$ a month

Other Information

The cash balance on March $31$ will be $$124,500,$ but Waterways has decided it would like to maintain a cash balance of at least $$400,000$ 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 $2\%$ interest. Borrowing is considered to be on the first day of the month and repayments and interest payments are on the last day of the month.

In May, $$690,000$ 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.

$($a$)$

For the second quarter of $2023,$ prepare a sales budget.

WATERWAYS CORPORATION

British Columbia Production Plant WATERWAYS CORPORATION

British Columbia Production Plant

Sales Budget for the $2$nd Quarter, $2023$

May

June

Sales in units

Per unit selling price

$

LA

$$

Total expected salesIn May, $$690,000$ 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.

$($a$)$

For the second qu