Waterways Corporation is preparing its budget for the coming year, 2020. The first step is to plan for the first quarter of that coming year. The company has gathered information from its managers in preparation of the budgeting process.

Sales
Unit sales for November 2019		113,000
Unit sales for December 2019		101,000
Expected unit sales for January 2020		112,000
Expected unit sales for February 2020		114,000
Expected unit sales for March 2020		116,000
Expected unit sales for April 2020		126,000
Expected unit sales for May 2020		139,000
Unit selling price		$12

Waterways likes to keep 10% of the next months 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 receivable on December 31, 2019, totaled $181,800. Direct Materials Direct materials cost 80 cents per pound. Two pounds of direct materials are required to produce each unit. Waterways likes to keep 5% of the materials needed for the next month in its ending inventory. Raw Materials on December 31, 2019, totaled 11,220 pounds. 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, 2019, totaled $102,605.

Direct Labor

Labor requires 12 minutes per unit for completion and is paid at a rate of $9 per hour.

Manufacturing Overhead
Indirect materials		30		per labor hour
Indirect labor		50		per labor hour
Utilities		50		per labor hour
Maintenance		30		per labor hour
Salaries		$42,000		per month
Depreciation		$17,500		per month
Property taxes		$2,800		per month
Insurance		$1,400		per month
Maintenance		$1,500		per month

Selling and Administrative
Variable selling and administrative cost per unit is $1.50.
Advertising		$14,000	a month
Insurance		$1,400	a month
Salaries		$71,000	a month
Depreciation		$2,600	a month
Other fixed costs		$2,900	a month

Other Information The Cash balance on December 31, 2019, totaled $99,000, but management has decided it would like to maintain a cash balance of at least $700,000 beginning on January 31, 2020. Dividends are paid each month at the rate of $2.50 per share for 5,040 shares outstanding. The company has an open line of credit with Romneys Bank. The terms of the agreement requires borrowing to be in $1,000 increments at 9% interest. Waterways borrows on the first day of the month and repays on the last day of the month. A $530,000 equipment purchase is planned for February.

For the first quarter of 2020, prepare a sales budget. WATERWAYS CORPORATION Sales Budget For the First Quarter of 2020 First Quarter February January March Quarter Expected Unit Sales Unit Selling Price $ $ $ Total Sales ta $ + $ ta e Textbook and Media Your answer is partially correct. For the first quarter of 2020, prepare a production budget. WATERWAYS CORPORATION Production Budget For the Month Ending March 2020 $ First Quarter January February March Quarter Add : Total Required Units Less : Beginning Finished Goods Unit Required Production Units e Textbook and Media For the first quarter of 2020, prepare a direct materials budget. (Round cost per pound to 2 decimal places, e.g. 0.25 and all other answers to 0 decimal places, e.g. 2,520.) WATERWAYS CORPORATION Direct Materials Budget First Quarter January February March Quarter + Add: Desired Ending Inventory Total Cost of Direct Materials Purchases Less : Beginning Materials Inventory Direct Materials Purchases $ $ $ $ $ $ WATERWAYS CORPORATION Direct Labor Budget For the First Quarter of 2020 First Quarter January February March Quarter Units to be Produced Direct Labor Time (Hours) Per Unit Total Required Direct Labor Hours 4 $ $ $ $ e Textbook and Media Your answer is partially correct. For the first quarter of 2020, prepare a manufacturing overhead budget. (Round overhead rate to 2 decimal places, eg, 5.25 and all other answers to O decimal places, eg. 2,520. List Variable Costs first.) WATERWAYS CORPORATION Manufacturing Overhead Budget For the First Quarter of 2020 First Quarter February January March Quarter Variable Costs Maintenance CA $ $ Utilities + Predetermined overhead rate for the quarter Indirect Materials Total Manufacturing Overhead $ $ $ to Fixed Costs Property Taxes + Maintenance -> Insurance Depreciation + Insurance Maintenance $ > $ $ $ Maintenance + $ $ $ $ Indirect Labor -> Indirect Materials For the first quarter of 2020, prepare a selling and administrative budget. (Enter per unit expenses rounded to 2 decimal places. E.g. 1.25) WATERWAYS CORPORATION Selling and Administrative Expense Budget March 2020 First Quarter February January March Quarter Budget Sales In Units Fixed Expenses $ $ $ $ Total Variable S & A Expense $ $ $ Fixed Expenses Salaries $ $ $ $ Insurance Other Depreciation Depreciation Depreciation $ $ $ Total S & A Expenses $ $ 2 $ e Textbook and Media X Your answer is incorrect. For the first quarter of 2020, prepare a schedule for expected cash collections from customers. Schedule of Expected Collections from Customers January February March $ $ Quarter Accounts receivable, 12/31/19 $ January sales February sales March sales Total cash collections $ X Your answer is incorrect. For the first quarter of 2020, prepare a schedule for expected payments for materials purchases. (Round answers to O decimal places, e.g. 2,520.) Schedule of Expected Cash Payments for Purchases January February March Quarter Accounts payable, 12/31/19 $ $ January February March Total payments e Textbook and Media WATERWAYS CORPORATION Cash Budget For the First Quarter of 2020 First Quarter January February March Quarter Direct Materials $ Add Manufacturing Overhead Interest + Manufacturing Overhead Less Repayments Direct Materials Dividends Direct Materials Selling And Administrative Excess (Deficiency) Of Available Cash Over Cash Disbursements Manufacturing Overhead Financing Excess (Deficiency) Of Available Cash Over Cash Disbursements Equipment Purchase | Adde Excess (Deficiency) Of Available Cash Over Cash Disbursements Less Interest Ending Cash Balance Ending Cash Balance . $ $ $