Waterways Corporation is preparing its budget for the coming year, 2022. 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 2021 Unit sales for December 2021 111,000 101.000 Expected unit sales for January 2022 112,000 Expected unit sales for February 2022 114,000 Expected unit sales for March 2022 115,000 Expected unit sales for April 2022 124,000 Expected unit sales for May 2022 138,000 Unit selling price $12 Waterways likes to keep 10% of the next month's 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, 2021, 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, 2021 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, 2021, totaled $120.595 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 20 per labor hour Salaries $41,000 per month Depreciation $17,400 per month Property taxes $2,900 per month Insurance $1,300 per month Maintenance $1,300 per month Selling and Administrative Variable selling and administrative cost per unit is $1.60. Advertising Insurance Salaries $14,000 a month $1,300 a month $72.000 a month Depreciation $2.400 a month Other fixed costs $2.800 a month Other Information The Cash balance on December 31, 2021, totaled $100,000, but management has decided it would like to maintain a cash balance of at least $700,000 beginning on January 31, 2022. Dividends are paid each month at the rate of $2.50 per share for 4,720 shares outstanding. The company has an open line of credit with Romney's 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 $540,000 equipment purchase is planned for February. (a) Your answer is correct. For the first quarter of 2022, prepare a sales budget. January 112000 WATERWAYS CORPORATION Sales Budget For the First Quarter of 2022 First Quarter February 114000 Expected Unit Sales Unit Selling Price V $ Total Sales 12 12 $ 1344000 $ 1360000 March 115000 12 1380000 For the first quarter of 2022, prepare a production budget. WATERWAYS CORPORATION Production Budget First Quarter January February For the first quarter of 2022, prepare a production budget. WATERWAYS CORPORATION Production Budget January February First Quarter March Quarter