You have been hired as the new budget controller for Dexter Inc. The firm has been in business for two years and currently makes one product, the Ultimate house. Using the information below, make a master budget to present to company executives for quarter 1. It will consist of the operating budget and the financial budget with the following components:

1. Overhead budget
2. Selling and administrative expenses budget
3. Ending finished goods inventory budget
4. Cost of goods sold budget
5. Budgeted income statement
6. Cash budget

All budgets should be in table format. An explanatory narrative should be included to describe computations made in each budget. Each narrative should be placed next to its corresponding budget table.

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Pertinent Information

Unit selling price $235

Projected sales in units for the first quarter

Month	Sales
January	50,000
February	60,000
March	70,000
April	70,000
May	70,000

Direct labor usage data:

Direct labor per unit	direct labor per hour
3 hours	$12.50

Direct material usage data:

Direct Material Usage	Per Unit	Unit Cost
Plastic pellets	10 lbs	$7
Insulation	5 lbs	$3

Inventory policy requires that there are sufficient materials on hand at the beginning of the month to produce 50% of that months estimated sales. This was the case on January 1.

Monthly overhead data:

	Fixed Cost	Variable Cost
Power		$1.00
Supplies		.40
Maintenance	25,000	.50
Supervision	16,000
Depreciation	100,000
Taxes	15,000
Other	10,000	1.40

Monthly overhead is estimated using a flexible budget formula and is measured in direct labor hours.

Monthly selling and administrative data:

	Fixed Cost	Variable Cost
Salaries	$20,000
Depreciation	10,000
Shipping		1.00
Other	10,000	.50

Monthly selling and administrative expenses are estimated using a flexible budget formula and are measured in units sold.

Finished goods inventory:

Month	Units	Unit Cost
January 1	40,000	$166

Desired ending inventory for each month is 80 percent of next month's sales.

All sales and purchases are for cash. The cash balance on January 1 was $500,000. Goldhouse Inc. requires a minimum month cash balance of $1000. If there is a cash shortage, money is borrowed at a rate of 10 percent and is repaid at the end of the quarter along with the interest due. Cash borrowed at the end of the quarter is repaid at the end of the following quarter. On January 1, there were no loans.