You are the controller for the Window Blinds Company (WBC), a firm that makes wooden window blinds. Your firm just reached an agreement with the local Home Depot to begin selling your products on a test basis in their store for the months of April, May and June 2020 quarter and you expect sales to increase. You also realize that you must produce a sufficient quantity to avoid out of stocks. To help you plan for the next quarter, you have asked your assistant to prepare a master budget for the second quarter of 2020 (April, May and June) to assist in managing operations, determining how much material needs to be ordered, and how much labor you will need. The controller has also asked you to prepare a pro-forma income statement for the 2^nd Quarter as well to be used in judging performance.

You should prepare your budgets and income statement using Excel. Your Excel spreadsheet must use formulas and cell references to allow for easy changes. The format for the budgets have been provided. You are expected to complete the budget on the spreadsheet attached to the assignment.

Information

Sales and Cash Collection Information

WBC sales staff have prepared a schedule of the budgeted sales for the months of January through December 2020. Expected unit sales for the months of 2020 follow:

January	1000
February March	3000 3000
April	2250
May	10000
June	7750
July	1000
August September October November December TOTAL	1500 1000 2000 1000 2500 35,000

WBC sells the blinds to Home Depot and its other customers at a price of $40 each. WBC sells all the blinds on account and expects to collect 60% of the cash in the month of the sale and 40% in the month after the sale..

Production and Material Budget Information

Finished Goods

Window Blinds Company (WBC) manufactures window blinds from wood. Each blind uses 3 feet of high-quality teak hardwood, which costs WBC $4 per foot. WBC likes to end the month with a finished goods inventory equal to 30% of the planned sales for the next month.

Raw Materials

In addition to the finished goods inventory, WBC also has an inventory of Teak wood in a climate controlled warehouse. WBC like to have in its warehouse a beginning inventory equal to 40% of the teak wood it will need for the months production.

WBC pays for the material it purchases in the month of purchase.

Labor Budget Information

WBC pays its workers $11 per hour and each blind takes 1 hour of labor to complete. All wages are paid in the month incurred.

Manufacturing Overhead Information

The total manufacturing overhead is estimated to be $94,500. Manufacturing Overhead is applied equally to each unit produced using

Overhead is paid in the month incurred.

Selling and Administrative Costs

Selling and administrative expenses are also a combination of fixed and variable costs. Fixed Selling and administrative costs are estimated at $8000 per month and variable selling and administrative costs are $5.00 per unit sold.

Cash Management

WBC starts the month of April with $2,000 in the bank. It would like to maintain a minimum of $10,000 in the bank. They have just opened up a line of credit with the bank that they can draw upon in the last day of the month. Interest is paid at the end of the month and the line of credit can be paid back in any increment. Interest is charged at the rate of 1% per month on the outstanding balance.

Required:

1. Prepare the following for WBC for the second quarter of the year (April, May, June). Include each month in your projections as well as the 2^nd Quarter totals for each budget.

1. Sales Budget
2. Production Budget
3. Raw Materials Purchases Budget
4. Direct Labor Budget
5. Manufacturing Overhead Budget
6. Budgeted Cost of Cost of Goods Sold
7. Selling and Administrative Expenses Budget
8. WBCs Budgeted Income Statement for the 2^nd Quarter.
9. Cash Budget for the 2^nd Quarter

1. In addition answer the following questions.

- What will be the number of units and the cost of the Raw Materials and Finished Goods Ending Inventories that will appear on the Balance Sheet at the End of the 2^nd Quarter?

- What will be the balance in Accounts Receivable at the end of the 2^nd Quarter?

-Will WBC need to consider borrowing any cash from a bank during the 2^nd Quarter? The beginning cash balance is $2000 and WBC would like to end each month in the 2^nd quarter with $10,000 in the bank.

If so, how much should be borrowed and how much will WBC owe the bank on June 30?