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.

SalesUnit sales for November 2019113,000Unit sales for December 2019102,000Expected unit sales for January 2020114,000Expected unit sales for February 2020111,000Expected unit sales for March 2020115,000Expected unit sales for April 2020125,000Expected unit sales for May 2020139,000Unit 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, 2019, totaled $183,600.

Direct Materials

Direct materials cost80cents 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, totaled11,370pounds. 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 LaborLabor requires 12 minutes per unit for completion and is paid at a rate of $9 per hour.

Manufacturing OverheadIndirect materials30per labor hourIndirect labor50per labor hourUtilities50

per labor hourMaintenance20

per labor hourSalaries$42,000per monthDepreciation$15,100per monthProperty taxes$3,000per monthInsurance$1,100per monthMaintenance$1,300per month

Selling and AdministrativeVariable selling and administrative cost per unit is $1.50.Advertising$14,000a monthInsurance$1,300a monthSalaries$74,000a monthDepreciation$2,800a monthOther fixed costs$2,900a 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 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 $450,000 equipment purchase is planned for February.

(a)

For the first quarter of 2020, sales budget.

WATERWAYS CORPORATION

Sales Budget

March 2020For the First Quarter of 2020For the Month Ending March 2020

First QuarterJanuaryFebruaryMarchQuarter

Direct Labor

Direct Materials

Expected

Unit Sales

Production Units

Total Sales

Unit Selling Price

Direct LaborDirect MaterialsExpected Unit SalesProduction UnitsTotal SalesUnit Selling Price

$

$

$

$

Direct LaborDirect MaterialsExpected Unit SalesProduction UnitsTotal SalesUnit Selling Price

$

$

$

$