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		114,000
Expected unit sales for February 2020		114,000
Expected unit sales for March 2020		117,000
Expected unit sales for April 2020		124,000
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 11,400 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 $102,885.

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		$43,000		per month
Depreciation		$16,900		per month
Property taxes		$2,900		per month
Insurance		$1,100		per month
Maintenance		$1,400		per month

Selling and Administrative
Variable selling and administrative cost per unit is $1.50.
Advertising		$17,000	a month
Insurance		$1,200	a month
Salaries		$72,000	a month
Depreciation		$2,400	a month
Other fixed costs		$2,800	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 $800,000 beginning on January 31, 2020. Dividends are paid each month at the rate of $2.70 per share for 4,850 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 $480,000 equipment purchase is planned for February

(a) Budgeted no of units Selling price($) Budgeted Total Sales($) Working notes:budgeted sales=No of units *selling price per unit Waterways Corporation Sales Budget for year 2020(Amt in $) JAN FEB $ 114,000 $ $ 12$ $ 1,368,000 $ ($114000*12) ($114000*12) MARCH TOTAL 114.000 $ 117,000 $ 345.000 12 $ 12 $ 12 1,368,000 $ 1,404,000 $ 4,140,000 ($117000*12) ($345000*12) (b) Budgeted No of units(A) Add:Desired ending Inventory(10% of next month sale unit) (B) 345,000 35,500 Waterways Corporation Production Budget for year 2020(Amt in units) JAN FEB $ 114,000 $ $ 11,400 $ (114000*10%) (117000*10%) $ 125,400 $ $ 11,400$ (114000*10%)(DEC CLOSING) (114000*10%) $ 114,000 $ Total Inventory Need(A)+(B)=(C) Less: Inventory at beginning(D) MARCH TOTAL 114,000 $ 117,000 $ 11,700$ 12.400$ (124000*10%) 125,700 $ 129,400 $ 11,400 $ 11,700$ (117000*10%) 114,300 $ 117,700$ 380,500 34,500 Budgeted Production(C)-(D) 346.000 Purchase Budget January Febraury March Quarter April Production Required 114000 114300 117700 346000 125500 2 2 2 2 Standard Pounds per unit Production Needs Budgeted Ending inventory 11430 228000 228600 235400 692000 251000 11770 12550 12550 Total DM Required 239430 240370 247950 704550 11400 11430 11770 11400 Beginning Inventory Budgeted Purchases Standard Price per Pound 228030 228940 236180 693150 $ 0.80 $ 0.80S 0.80 $ 0.80 Budgeted Purchases Cost $ 182,424 $ 183,152 $ 188,944 $ 554,520 Direct Labour Budget Jan Feb March Quarter Units to be produced 114000 114300 117700 346000 0.2 0.2 0.2 0.2 Multiply by: DL hours per unit Total DL hours 22800 22860 23540 69200 Multiply by: DL Rate 9 9 9 9 Total Direct Labour budget 205200 205740 211860 622800 Merciesturing Overness Budget March Quarter Verissie Cesta 6840 7062 20760 Indirect Material (Direct laber heures per Indirect Labour 34600 15770 34600 Maintenance 4560 13940 Total Variable Coat 34200 34290 35310 103800 Fised Coats 43000 43000 43000 129000 15900 16900 50700 Property Taxes 2900 2900 2700 Maintenance 1400 1400 1500 1500 1500 3300 Total Fixed Coat 65300 65300 65300 195900 Total Menecturing oH 99500 99800 100610 299700 Direct Leber Hees 22900 22860 23540 69200 Prescines et Selling and Admin Expense Budget Jan Feb March Quarter Budgeted Sales in units 114000 114000 117000 345000 Variable Expenses per unit 15 15 15 15 171000 171000 175500 Total Variable S&A Expenses 517500 Fixed Expenses Advertising 17000 17000 17000 51000 Insurance 1200 1200 1200 3600 Salaries 72000 72000 72000 216000 Depreciation 2400 2400 2400 7200 Other 2800 2800 2800 8400 Total Fixed Expenses 95400 95400 95400 286200 Total S&A Expenses 266400 266400 270900 803700 Expected collection from debtors Jan Feb March Quarter 181800 181800 Accounts Receivable as on 31.12.2019 January Sales 1162800 205200 1368000 (85% in jan and 15% in Feb) Feb Sales 1162800 205200 1368000 (85% in Feb and 15% in Mar) March Sales 1193400 1193400 (85% in Mar) Total Cash collections 1344600 1368000 1398600 4111200 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 $ $ LINK TO TEXT LINK TO TEXT LINK TO TEXT For the first quarter of 2020, prepare a cash budget. (Round answers to o decimal places, e.g. 2,520.) WATERWAYS CORPORATION Cash Budget First Quarter January February March Quarter $ $ +