You have been given the following information to prepare the budgets for all 4 Quarters, 2018 for the Bullwinkle, Inc. The product is kayaks. The company is preparing the budget for budget analysis for 2018. Requirements: Prepare the following budgets for 4 Quarters, 2018: Sales budget Production budget Materials budget Labor budget Manufacturing Overhead budget Selling and Administrative budget Expected collections Expected payments Cash budget Discuss why the company should prepare flexible budgets rather than static budgets Discuss the importance of a responsibility report. Sales Expected units sales for quarter ending 03-31-2018 Expected units sales for quarter ending 06-30-2018 Expected units sales for quarter ending 09-30-2018 Expected units sales for quarter ending 12-31-2018 Expected unit sales for quarter ending 03-31-2019 Expected units sales for quarter ending 06-30-2019 1,000 units 1,500 units 750 units 750 units 1,100 units 1,500 units Unit sales price $ 275.00 Sales are on account with 85% of the accounts receivable collected in the quarter of sale, and 15% are collected in the quarter after sale. Accounts Receivable on December 31, 2017 totaled $194,750.00 collected in the 1st Qtr, 2018. 50% of materials are paid in the quarter of purchase, and 50% are paid in the quarter after purchase. Accounts Payable on December 31, 2017 totaled $120,595.00, paid 100% in 1st Qtr, 2018. Sales of Common Stock 1st Qtr, 2018: Sale of Preferred Stock 2nd Qtr, 2018: $ 294,650.00 3rd Qtr, 2018 $ 310,500.00 $ 145,000.00 The company policy is to have finished goods ending Inventory in a quarter equal to 20% of the next quarter's expected sales. Ending finished goods inventory at December 31, 2017 will be 200 kayaks. Production of each kayak requires 20 pounds of polyethylene powder and a finishing kit (rope, seat, hardware, etc.). The ending inventory of powder should be 25% of the amount needed for production in the next quarter. Assume that the ending Inventory of powder on December 31, 2017 is 19,400 pounds. The finishing kits can be assembled as they are needed. The powder used in the kayaks costs $1.50 per pound, and the finishing kits cost $55.00 each. Production of a single kayak requires 2 hours of time by more experienced, type employees, and 3 hours of finishing time by type Il employees. The type I employees are paid $15 per hour, and the type ll employees are paid $12 per hour. Manufacturing Overhead information: $ $ Indirect Materials Indirect Labor Utilities Maintenance Salaries Depreciation $ 0.30 Per DL hour for Skilled employees 0.50 Per DL hour for Skilled employees 0.45 Per DL hour for Skilled employees $ 0.25 Per DL hour for Skilled employees $ 8,500.00 Per month $ 3,900.00 Per month You do not need to classify manufacturing overhead costs by variable and fixed. Information for the Selling and Administrative Budget: Advertising Insurance Salaries Depreciation Other fixed costs $ 3,475.00 per month $ 1,500.00 per month $ 10,800.00 per month $ 2,500.00 per month $ 3,500.00 per month You do not need to classify selling and administrative costs by variable and fixed. The cash balance on December 31, 2017 totaled $100,500. Management has decided to maintain a cash balance of at least $200,000 at the end of each quarter, 2018. Dividends are paid each quarter at the rate of $2.50 per share for 5,000 shares outstanding. The company has an open line of credit (LOC) with the bank. The terms of agreement requires borrowing to be in $1,000 increments at 8% interest. The funds borrowed, if necessary, at the end of each quarter are paid back the following quarter. A $475,000.00 equipment purchase is planned for the 2nd quarter, 2018, and a $370,000.00 equipment purchase is planned for the 3rd quarter, 2018. 1. Sales Budget Budgeted No of Units Selling Price Budgeted Total Sale 02 03 04 Full Yearl Next 2 Next 1000 1500 750 750 4000 1100 1500 2750 $ 27.0 $ 275.0 $ 275.0 $ 2750 $ 2750 $ 27.0 275,000 $412,500 $206,250 $206,250 $ 1,100,000 2. Production Budget 03 04 Total 1,000 300 1,500 750 220 130 150 Budgeted No of Units Add: Desired Ending inventory Total Need Less: Begening inventory Budgeted Production 1 Next Q2 Next 1100 1500 300 1400 4.000 220 4.220 920 1,100 1,150 7 50 820 4020 1.150 3. Direct Material Purchase Budget Poly Budgeted Production Raw material needed per unit Total Mat Required Add: Desired Ending Inventory 1 Next 1130 20:00 23.500 Total Need 02 03 1.100 1.350 20.00 20:00 22,000 27.000 6,750 3.750 28.750 0.750 -19,400 -6.750 9.350 24,000 1.50 $ 1.50 $ 14,025 $ 36,000 $ 60,500 $ 74,250 $ 74,525 $110.250 04 750 20:00 15.000 4,100 19,100 -3.750 15,150 150 $ 23,025 $ 41,250 $ 64,775 Total 820 4,020 20:00 20:00 16400 0.400 5900 5.900 22,300 86.00 4.100 -19.000 18.200 66.900 1.50 $ 1.50 27,300 $ 100,350 45.100 S 221,100 77.400$ 321.450 Less: Beginning inventory Budgeted Purchase of Raw Mat Cost per unit of RM Budgeted Purchase of Raw Mat Budgeted Purchase of Raw Mats Total Raw Material Purchases Poly Finishing Kit 4. Direct labor Budget Type 1 02 03 04 Total 1.100 1.350 750 820 4,020 2 Budgeted Production per unit Hour Total Hours Required Der Hour Price Budgeted Direct Labor Cost-Type 1 2200 15$ 33,000 $ 3200 15 $ 40,500 $ 1500 15$ 22,500 $ 1600 15 S 24.600 $ 2010 15 120,500 A Type 2 03 1350 04 750 Total 820 Total Mat Required Total Hours Required Per Hour Price Budgeted Direct Labor Cost-Type 2 Total Direct Labor Cost 4050 12 $ 48,000 $ 89,100 $ 2250 12 $ 27,000 $ 49,00 $ 2050 12 S 29,520 S 54.120 $ B AB 39,000 $ 72,000 $ 144,720 205,320 5. Extory Overhead Budget 1.650 2.750 Indirect Material Indirect labor Utilities Maintenance Salaries Depreciation so per OL Hous $0.50 per DL Hours $0.45 per OL Hous $0.25 per DL Hours 03 2.025 3.375 3.038 1.653 25,500 $ 11,200 $ 04 1.125 1.875 1.638 938 25,500 $ 11,700 $ 1230 2,050 1.845 ,025 25,500 11,700 Total 6010 10,050 9045 5 025 102.000 46,800 1,375 25,500 $ 11,200 $ Overhead 45,450 $ 47,325 $ 42.825 $ 43.350 $ 170.950 6.splintentist luliet Total Advertising Salaries Depreciation Other Fixed Cost 10,425 $ 4,500 $ 32,400 $ 7,500 $ 10,500 5 10425 $ 4.500 $ 32.400 $ 7,500 $ 30,500 $ 10,425 $ 4,500 $ 32,400 $ 7,500 $ 10,500 $ 10,425 S 4,500 $ 32,400 $ 7,500 $ 10.500 $ 41,200 10.000 129,500 30.000 42.000 Selling and Admin Expense 65,325 $ 65,325 $ 65,125 $ 65,325 S 261,300