You and your team are part of the budget analyst office with Patricks Widget Company. Your supervisor has tasked your team with preparing the 20X2 Master Budget for one of Patricks Widget Companys product, the zTec Widget. In addition, your supervisor wants to get your teams opinion on a few changes upper management would like to take in 20X2 and whether they should pull the trigger on a few different options in the manufacturing process. Below is the information required to prepare the 20X2 Master Budget for zTec Widget:

The expected sales for 20x2 are as follows: January February March April May June July August September October November December Total Sales in Units 5,450 5,995 6,595 7,255 7,327 6,961 5,917 5,325 6,125 7,042 7,185 5,028 76,205 Each widget sells for $12.00 per until, however management has implemented a sales price change to $12.50 in August of 20x2.

This change has been communicated to all customers and will not be rolled back or changed. All sales are on account and Patricks Widget Companys experience with cash collections is that 60% is collected in the month of sale, 30% is collected in the first month AFTER the sale and the final 10% is collected in the second month AFTER the sale. The company doesnt expect any bad debt during the year and is ignored. For November 20x1, sales were $52,000. December 20x1s sales were $35,000.

Patricks Widget Company desires 80% of the of the following months estimated sales needs in finished goods inventory at the end of each month. It is expected that on January 1, 20X2, the beginning finished goods inventory will be 4,360 units. For December 20X2, the company desired 4,800 in ending inventory (production budget) and 12,500 lbs in raw materials (Direct Materials Budget). Each widget requires 2.5 pounds of plastics in order to produce. Patricks Widget Company desires 80% of the next months raw material in inventory at the end of each month. It is expected that on January 1, 20X2, the beginning raw materials inventory will be 8,500 pounds. The cost of 1 pound of plastics is $0.89 until July when the price will go up to $0.94 per pound. All raw materials are paid for in the month it was acquired and no payable related to the purchase of raw material are incurred for the following year.

Regarding direct labor, it takes .25 direct labor hour to produce 1 widget. Direct labor costs are as follows: - Wages - $20.00 per direct labor hour - Retirement Contribution - $0.45 per direct labor hour - Workers Compensation Insurance - $0.20 per direct labor hour - Employee Medical - $0.80 per direct labor hour - Employers Social Security 7.65% of wages only (excluding retirement contribution, workers compensation insurance, and employee medical). Production overhead includes the following: - Shipping and Handling $0.25 per unit Sold - Raw Materials Storage and Material Handling - $0.12 per pound of raw materials in ending inventory at the end of each month - Finished Goods Inventory Storage and Material Handling - $0.21 per unit in ending inventory at the end of each month - Other Overhead - $10.75 per direct labor hour during the month Januarys cash beginning balance is estimated to be $87,500.00 Part 1 Based on the information above, your team will use the master budget template provided to you on BlackBoard to come up with 20X2s master budget. Your team will produce the following budget (in the following order): - Sales Budget - Cash Receipts Budget - Production Budget - Direct Materials Budget - Direct-Labor Budget - Production Overhead Budget - Cash Disbursement Budget - Cash Budget (Note Use formulas whenever possible. This will be beneficial in Parts 2 and 3.