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 113,000 Unit sales for December 2021 101.000 Expected unit sales for January 2022 Expected unit sales for February 2022 Expected unit sales for March 2022 114,000 111,000 117.000 Expected unit sales for April 2022 Expected unit sales for May 2022 124,000 139,000 Unit selling price $12 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 11,370 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, 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 50 per labor hour Maintenance 20 per labor hour Salaries $43,000 per month Depreciation $18.200 per month 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. Utilities Property taxes $2,900 per month Insurance $1,100 Maintenance $1,200 per month per month Selling and Administrative Variable selling and administrative cost per unit is $1.60. Advertising Insurance Salaries Depreciation Other fixed costs $16,000 a month $1,300 a month $72,000 a month $2,600 a month $3.100 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 $2.30 per share for 4,910 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 $500,000 equipment purchase is planned for February. For the first quarter of 2022, prepare a sales budget. January Expected Unit Sales Unit Selling Price Total Sales 114,000 12 1,368,000 WATERWAYS CORPORATION Sales Budget For the First Quarter of 2022 First Quarter February +A 111,000 12 1,332,000 March 117,000 For the first quarter of 2022, prepare a production budget. Expected Unit Sales Add Desired Ending Finished Goods Unit 12 Total Required Units January WATERWAYS CORPORATION Production Budget For the First Quarter of 2022 First Quarter February 114,000 11,100 125,100 111,000 11,700 111,900 1,404,000 Less : Beginning Finished Goods Unit 11,400 i 11,100 i Required Production Units 113,700 111,600