Jamison and Co make lightweight yoga mats. Jamison is preparing its budget for the second quarter of 2022.

Each mat sells for $24. Sales in units are as follows:

February 12,000 $288,000

March 12,000 288,000

April 13,500 324,000

May 15,000 360,000

June 15,500 372,000

July 15,000 360,000

August 16,000 384,000

In order to prevent stockouts they maintain an ending inventory at the end of each month. That inventory is 30% of the following month’s sales.

The mats are made of a compound made of rubber and plastic which comes in a variety of colors and is made in India. Jamison buys the compound, rolls it flat, cuts the mats and stamps its logo on each one. Each mat requires 1.6 square yards of compound.

Because the compound comes from India, they require that a 20% inventory of the following months production. The compound costs $3.25 per square yard. Materials needed for production in July are $45,125.

Each mat requires .3 hours of direct labor and Jamison pays its assembly line workers $18 per hour. Variable overhead includes inexpensive cording that is attached to the mats and is included in the Variable OH application rate of $12 per direct labor hour. Fixed manufacturing overhead is applied at $8 per direct labor hour.

Delivery expenses are 7% of sales and sales commissions are another 4%. Fixed general and administrative are $32,000 per month and 50% of that amount is depreciation.

Sales are 30% cash and 70% on credit. Credit sales are collected as follows:

10% in the month of sale

50% in the month following sale

10% in the second month following sale

Payments for Purchases are made 25% in the month of purchase and 75% in the month following purchase. Purchases for March total $65,375

Jamison requires that a minimum of $20,000 remain in the bank at all times. If the balance drops below $20,000 Jamison borrows from it’s line of credit in increments of $1,000. It pays all borrowings back as soon as possible. There are no borrowings on the line of credit on April 1. The beginning cash balance on April 1 is $20,000.

Jamison expects to purchase new equipment in April totaling $65,000 and pays a $50,000 dividend in the last month of each quarter.

Using the template provided, prepare a master budget and financial budgets for Jamison for the months of April-June 2022, showing quarterly totals. These should include the following:

Sales Budget

Production Budget

Materials purchases budget

Direct labor Budget

Manufacturing Overhead

Selling, General and Administrative Budget

Cost of Goods Sold Budget

Budgeted Income Statement

Cash receipts budget

Cash payments budget

Cash Budget

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