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		102,000
Expected unit sales for January 2020		114,000
Expected unit sales for February 2020		111,000
Expected unit sales for March 2020		115,000
Expected unit sales for April 2020		125,000
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 $183,600. 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 11,370 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 $103,725.

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		$42,000		per month
Depreciation		$15,100		per month
Property taxes		$3,000		per month
Insurance		$1,100		per month
Maintenance		$1,300		per month

Selling and Administrative
Variable selling and administrative cost per unit is $1.50.
Advertising		$14,000	a month
Insurance		$1,300	a month
Salaries		$74,000	a month
Depreciation		$2,800	a month
Other fixed costs		$2,900	a month

Other Information The Cash balance on December 31, 2019, totaled $102,000, but management has decided it would like to maintain a cash balance of at least $800,000 beginning on January 31, 2020. Dividends are paid each month at the rate of $2.30 per share for 4,750 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 $450,000 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 January February March Quarter Expected Unit Sales 114000 111000 115000 340000 Unit Selling Price $ $ 12 $ 12 $ 12 $ Total Sales A 1368000 & 1332000 & 1380000 4080000 For the first quarter of 2020, prepare a production budget. WATERWAYS CORPORATION Production Budget For the First Quarter of 2020 First Quarter January February March Quarter Expected Unit Sales 114000 111000 115000 Add A. Desired Ending Finished Goods Unit 11100 11500 12500 Total Required Units 125100 122500 127500 Less Beginning Direct Materials 11400 11100 11500 Required Production Units 113700 111400 116000 341100 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 o decimal places, e.g. 2,520.) WATERWAYS CORPORATION Direct Materials Budget For the First Quarter of 2020 First Quarter February March January Quarter Units to be produced 114000 111000 115000 Direct Materials Per Unit 228000 222000 230000 Total Materials Required Add : 11100 11500 12500 Desired Ending Inventory Total Materials Required 239100 233500 242500 Less . Beginning Materials Inventory 11370 11140 11600 Total Pounds Required for Production 227730 222360 230900 Cost Per Pound .80 $ .80 .80 Total Cost of Direct Materials Purchases 182184 177888 184720 544792 For the first quarter of 2020, prepare a direct labor budget. (Round time per unit to nearest hour, e.g. 30 minutes will be rounded to 0.5 hours) WATERWAYS CORPORATION Direct Labor Budget For the First Quarter of 2020 First Quarter January February March Quarter Units to be Produced 114000 111000 115000 340000 Direct Labor Time (Hours) Per Unit Total Required Direct Labor Hours 22800 22200 23000 68000 Direct Labor Cost Per Hour Total Direct Labor Cost 205200 199800 $ 207000 $ 612000 For the first quarter of 2020, prepare a manufacturing overhead budget. (Round overhead rate to 2 decimal places, e.g. 5.25 and all other answers to 0 decimal places, e.g. 2,520. List Variable Costs first.) WATERWAYS CORPORATION Manufacturing Overhead Budget For the First Quarter of 2020 A) First Quarter January February March Quarter Variable Costs Indirect Materials 6840 $ 6660 $ 6900 $ 20400 Indirect Labor 11400 11100 11500 34000 Utilities 11400 11100 11500 34000 Maintenance 4560 4440 4600 13600 Total Variable Cost 34200 $ 33300 34500 102000 Fixed Costs Salaries 42000 42000 42000 126000 Depreciation 15100 15100 15100 45300 Property Taxes 3000 3000 3000 9000 Salaries 42000 42000 42000 126000 Depreciation 15100 15100 15100 45300 Property Taxes 3000 3000 3000 9000 Insurance 1100 1100 1100 3300 Maintenance 1300 1300 1300 3900 Total Fixed Costs 62500 62500 62500 187500 Total Manufacturing Overhead 22800 95800 t 97000 289500 Direct Labor Hours 96700 22200 23000 Predetermined overhead rate for the quarter 289500 WATERWAYS CORPORATION Selling and Administrative Expense Budget For the First Quarter of 2020 , First Quarter January February March Quarter Budget Sales In Units Variable Expenses Per Unit I Total Variable S & A Expense Fixed Expenses Advertising Insurance Salaries Depreciation Other Total Fixed Expenses Total S & A Expenses A 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 183600 183600 January sales 1162800 205200 1368000 February sales 1132300 199800 1332000 March sales 1173000 1173000 Total cash collections 1346400 1337400 1372800 $ 4056600 For the first quarter of 2020, prepare a schedule for expected payments for materials purchases. (Round answers to 0 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 For the first quarter of 2020, prepare a cash budget. (Round answers to 0 decimal places, e.g. 2,520.) WATERWAYS CORPORATION Cash Budget For the First Quarter of 2020 First Quarter January February March Quarter Beginning Cash Balance Add . Receipts Collections From Customers Total Available Cash Less Disbursements Direct Materials Direct Labor Manufacturing Overhead Selling And Administrative Direct Labor Manufacturing Overhead Selling And Administrative Dividends Equipment Purchase Total Disbursements Excess (Deficiency) Of Available Cash Over Cash Disbursements A Financing Add A. Borrowings Less : Repayments Interest Ending Cash Balance $