You knew they were good, but you never thought Grandma's old cookie recipe would bring youthis far! It all started about three years ago when you began using your Grandma's cookie recipe to bake cookies as a little side business. Youbake them right in your home and sell them to friends and local stores. Response has been great! People love the cookies, and you're making a little extra money. There is a small problem with all of this success. The volume of business has grown so much that you can no longer keep up with demand. Your desire to grow this hobby into a full-fledged business has led you to explore expanding You have been investigating new facilities, equipment, and the requirements of hiring a few employees. However, you're missing one Important element; money to fund this expansion! On the advice of a friend, you meet with a local banker. She says that the bank cannot lend you any money without a business plan that describes your financial results, marketing strategy, and projections for the future. You show the banker your income statement and balance sheet as of the most recent year-end, but what she really needsto see is your budget for the next year. When you return home afterthe meeting you pull out your college accountingtextbook and settle into produce a plan for next year. You pull out Grandma's recipe to see what Ingredients it takes to make a dozen cookies. Next, you go to your invoice fiesto determine the cost of each of the ingredients. You brainstorm to develop a list of the new costs that you must incur when you expand your operations After analyzing all of this data you are able to break your costs into several categories, You realize that some costs are for raw materials while others are related to manufacturing overhead or operating expenses. You also realize that some costs appear to be fixed while other costs are variable You now have the information you need to create a budget that will allow you to show the banker your plans for the coming year. This budget will also help you to understand your sales and the collection on those sales. You will be able to determine how much money you need to purchase the ingredients for your cookies and to pay your overhead and operating expenses. Yourealize that if you can estimate how many dozens of cookies you can soll, then you can calculate how many ingredients to buy and how much overhead and operating expenses will be. You will need to get your sales estimate as accurate as possible. Use the information in Exhibits 1 - 3 to prepare a master budget for the first quarter of the year (January-March). Exhibiti presents information regarding sales price, production costs, and operating costs. Exhibit 2 contains information regarding your sales projections, expected collection patterns, purchasing and payment patterns for the first four months of the year. Exhibit 3 presentsinformation regarding your plans for capital contributions, equipment purchases, loans, minimum cash balance. It also contains your Grandma's cookie recipe Required Complete the Connect assignment Master Budget Project by preparing the following components of Sweetums Inc.'s master budget: 1.) Sales budget 2) Cash collections budget 3) Direct materials purchases budgets (5) 4) Cash disbursements for materials budget 5.) Manufacturing overhead budget 5.) Operating expenses budget 7.) Cash budget A dozen cookies sell for $12.05. Direct Materials Costs Material Flour Sugar Eggs Shortening Chocolate Chips Per Unit Cost $ 15 $ 15 $ 10 $50 $1.25 Any other ingredients are indirect materials and are considered part of manufacturing overhead Direct Labor Costs Information regarding direct labor costs is not maintained because you are your only employee. In this case, labor costs are considered part of manufacturing overhead Manufacturing Overhead Costs Utilities Other indirect materials andlabor Maintenance Depreciation Totals Variable costs per dozen $ 50 $.75 N/a N/a $ 1.25 Ficed costs per month N/a N/a $ 250 $ 500 $750 Operating Expenses Shipping Costs Salaries Depreciation Other Totals Variable costs per dozen $ 150 Na NAS N/a $150 Fbed costs per month N/a $ 2.000 $ 200 $ 1450 33.650 Monthly Sales Projections (in dozens of cookies): January 1,000 February 1,200 March 1,300 April 1,100 You have stopped production of cookies at year end to facilitate the expansion of the business. Therefore, you expect to have no uncollected accounts receivable, unpaid accounts payable, or raw materials inventories at January 1, the beginning of your budget period. Collections of Sales Sixty percent (60%) of all sales are collected in the month the sale occurs. Forty percent (40%) of all sales are collected in the month following the sale. Production I The company produces cookies daily. No work-in-process orfinished goods inventories are maintained. Raw Materials inventory, Purchases, and Payments The company plans to maintain an endinginventory of raw materials at the end of each month equal to 10% of the raw materials production needs for the next month Twenty-five percent (25%) of materials purchases are paid for in the month of the purchase. Seventy- five percent (75%) of materials purchases are paid for in the month following the purchase EXHIBIT 3 Financing Activities and Cookie Ingredients $10,000 Financing Activities January beginning cash balance Loan acquired in January Equipment purchase in January Minimum desired cash balance at the end of each month $25,000 $20,000 $10,000 if cash over $10,000 is available at the end of the month, you will make repayments of outstanding loans in multiples of $1,000. If additional borrowing is necessary to maintain the $10,000 end-of-month balance, you have a line of credit with the bank and will borrow additional funds in multiples of $1,000, Interest (12% annual rate) is paid monthly on total outstandingborrowing at the end of the prior month Sweetums Cookie Ingredient List (makes 1 dozen cookies) 2 cups flour 1 cups sugar 1 cup shortening 2 cups chocolate chips 1 teaspoons vanilla 1 teaspoon baking soda 1 teaspoon salt Rerum > Use the information provided in the Sweetums Cookies - Master Budget Project Prompt (posted in Canvas Week 6 module) to prepare the direct materials budget for four for the first quarter to prepare the direct materials budget for flout for the first quarter January February March Quarter Dozens of cookies to be produced 1000 12001 1300 3500 250 250 250 Cups pet dozen cookies Production needs 2500 3000 3250 Add: Desired ending inventory 300 325 275 10 Total needs O 325 3001 3025 2800 3200 Less Beginning inventory Cups to be purchased Cost percup Total cost of our 15 15 15 420 453.75 480 . Use the information provided in the Sweetums Cookies - Master Budget Project Prompt [posted in Canvas Week 6 module) to prepare the direct materials budget for all types of sugar for the first quarter January February March Quarter Dozens of cookies to be produced 1000 1200 1300 3500 Cups per dozen cookies 15 15 15 Production needs 1500 1800 1950 Add Desired ending inventory 180 195 165 Total needs Less Beginning inventory 0 180 195 Cups to be purchased 1680 1815 1920 Cost per Cup 0.15 015 Total cost of sugar 1252 27225 288 Bolo III 15 0 Use the information provided in the Sweetums Cookies - Master Budget Project Prompt (posted in Canvas Week 6 module) to prepare the direct materials budget for eggs for the first quarter January February March Quarter 10001 Dozens of cookies to be produced 12001 1300 3500 Eggs per dozen cookies 2 2 21 Production needs 2000 2400 26001 Add Desired ending inventory 240 260 220 OI Total needs 240 260 > Less Beginning inventory Eggsto be purchased 2240 2420 2560 1 1 OB10 Cost per egg Olo 224 242 256 Total cost of eggs . Use the information provided in the Sweetums Cookies. Master Budget Project Prompt (posted in Canvas Week 6 module) to prepare the direct materials budget for shortening for the first quarter January February March Quarter 1000 1200 1300 3500 Dozens of cookies to be produced Cups per dozen cookies 1 1000 1200 Production needs 1300 120 130 110 Add Desired ending inventory Total needs O 120 130 Less Beginning inventory 1120 1210 12801 Cups to be purchased 0.5 05 0,5 Cost per cup 560 505 540 Total cost of shortening >> 0 Use the information provided in the Sweetums Cookies - Master Budget Project Prompt (posted in Canvas Week 6 module) to prepare the direct materials budget for chocolate chips for the first quarter January February March Quarter Dozens of cookies to be produced 1000 1200 1300 3500 Cups per dozen cookies 2 2 Production needs 2000 2400 2600 240 260 Add Desited ending inventory 220 Total needs 0 240 260 Less Beginning inventory 2240 2420 12560 Cups to be purchased 1125 125 12 Cost per cup 12800 3025 13200 Total cost of chocolate chips OOOO OI OOO OOO SISS Use the information provided in the Sweetums Cookies. Master Budget Project Prompt (posted in Canvas Week 6 module) to prepare the cash disbursements for direct materials budget for the first quarter January February March Quarter January disbursements February disbursements March disbursements Total cash disbursements for materials Use the information provided in the Sweetums Cookies - Master Budget Project Prompt [posted in Canvas Week 6 module to prepare the manufacturing overhead budget for the first quartet January February March Quarter Dozens of cookies to be produced Variable manufacturing overhead pet dozen Budgeted variable manufacturing overhead Budgeted fixed manufacturing overhead Total budgeted manufacturing overhead Less Noncash costs Cash disbursements for manufacturing overhead Use the information provided in the Sweetums Cookies - Master Budget Project Prompt (posted in Canvas Week 6 module) to prepare the operating expenses budget for the first quarter March January 1000 February 1200 Quarter 3500 1300 Dozens of cookies to be produced Variable operating expenses per dozen Budgeted variable operating expenses Budgeted fixed operating expenses Total budgeted operating expenses Les Noncash costs Cash disbursements for operating expenses 3650 3650 3650 5150 5450 5600 Use the information provided in the Sweetums Cookies. Master Budget Project Prompt posted in Canvas Week 6 module to prepare the cash budget for the first quartet January February March Quarter Beginning cash balance 10000 Add Cash collections 7230 496 15180 Total cash available 17230 Less Disbursements Direct materials Manufacturing overhead Operating expenses Equipment purchases 20000 Total disbursements Excess deficiency of cash Financing Borrowings Repayments Interest Total financing Ending com balance You knew they were good, but you never thought Grandma's old cookie recipe would bring youthis far! It all started about three years ago when you began using your Grandma's cookie recipe to bake cookies as a little side business. Youbake them right in your home and sell them to friends and local stores. Response has been great! People love the cookies, and you're making a little extra money. There is a small problem with all of this success. The volume of business has grown so much that you can no longer keep up with demand. Your desire to grow this hobby into a full-fledged business has led you to explore expanding You have been investigating new facilities, equipment, and the requirements of hiring a few employees. However, you're missing one Important element; money to fund this expansion! On the advice of a friend, you meet with a local banker. She says that the bank cannot lend you any money without a business plan that describes your financial results, marketing strategy, and projections for the future. You show the banker your income statement and balance sheet as of the most recent year-end, but what she really needsto see is your budget for the next year. When you return home afterthe meeting you pull out your college accountingtextbook and settle into produce a plan for next year. You pull out Grandma's recipe to see what Ingredients it takes to make a dozen cookies. Next, you go to your invoice fiesto determine the cost of each of the ingredients. You brainstorm to develop a list of the new costs that you must incur when you expand your operations After analyzing all of this data you are able to break your costs into several categories, You realize that some costs are for raw materials while others are related to manufacturing overhead or operating expenses. You also realize that some costs appear to be fixed while other costs are variable You now have the information you need to create a budget that will allow you to show the banker your plans for the coming year. This budget will also help you to understand your sales and the collection on those sales. You will be able to determine how much money you need to purchase the ingredients for your cookies and to pay your overhead and operating expenses. Yourealize that if you can estimate how many dozens of cookies you can soll, then you can calculate how many ingredients to buy and how much overhead and operating expenses will be. You will need to get your sales estimate as accurate as possible. Use the information in Exhibits 1 - 3 to prepare a master budget for the first quarter of the year (January-March). Exhibiti presents information regarding sales price, production costs, and operating costs. Exhibit 2 contains information regarding your sales projections, expected collection patterns, purchasing and payment patterns for the first four months of the year. Exhibit 3 presentsinformation regarding your plans for capital contributions, equipment purchases, loans, minimum cash balance. It also contains your Grandma's cookie recipe Required Complete the Connect assignment Master Budget Project by preparing the following components of Sweetums Inc.'s master budget: 1.) Sales budget 2) Cash collections budget 3) Direct materials purchases budgets (5) 4) Cash disbursements for materials budget 5.) Manufacturing overhead budget 5.) Operating expenses budget 7.) Cash budget A dozen cookies sell for $12.05. Direct Materials Costs Material Flour Sugar Eggs Shortening Chocolate Chips Per Unit Cost $ 15 $ 15 $ 10 $50 $1.25 Any other ingredients are indirect materials and are considered part of manufacturing overhead Direct Labor Costs Information regarding direct labor costs is not maintained because you are your only employee. In this case, labor costs are considered part of manufacturing overhead Manufacturing Overhead Costs Utilities Other indirect materials andlabor Maintenance Depreciation Totals Variable costs per dozen $ 50 $.75 N/a N/a $ 1.25 Ficed costs per month N/a N/a $ 250 $ 500 $750 Operating Expenses Shipping Costs Salaries Depreciation Other Totals Variable costs per dozen $ 150 Na NAS N/a $150 Fbed costs per month N/a $ 2.000 $ 200 $ 1450 33.650 Monthly Sales Projections (in dozens of cookies): January 1,000 February 1,200 March 1,300 April 1,100 You have stopped production of cookies at year end to facilitate the expansion of the business. Therefore, you expect to have no uncollected accounts receivable, unpaid accounts payable, or raw materials inventories at January 1, the beginning of your budget period. Collections of Sales Sixty percent (60%) of all sales are collected in the month the sale occurs. Forty percent (40%) of all sales are collected in the month following the sale. Production I The company produces cookies daily. No work-in-process orfinished goods inventories are maintained. Raw Materials inventory, Purchases, and Payments The company plans to maintain an endinginventory of raw materials at the end of each month equal to 10% of the raw materials production needs for the next month Twenty-five percent (25%) of materials purchases are paid for in the month of the purchase. Seventy- five percent (75%) of materials purchases are paid for in the month following the purchase EXHIBIT 3 Financing Activities and Cookie Ingredients $10,000 Financing Activities January beginning cash balance Loan acquired in January Equipment purchase in January Minimum desired cash balance at the end of each month $25,000 $20,000 $10,000 if cash over $10,000 is available at the end of the month, you will make repayments of outstanding loans in multiples of $1,000. If additional borrowing is necessary to maintain the $10,000 end-of-month balance, you have a line of credit with the bank and will borrow additional funds in multiples of $1,000, Interest (12% annual rate) is paid monthly on total outstandingborrowing at the end of the prior month Sweetums Cookie Ingredient List (makes 1 dozen cookies) 2 cups flour 1 cups sugar 1 cup shortening 2 cups chocolate chips 1 teaspoons vanilla 1 teaspoon baking soda 1 teaspoon salt Rerum > Use the information provided in the Sweetums Cookies - Master Budget Project Prompt (posted in Canvas Week 6 module) to prepare the direct materials budget for four for the first quarter to prepare the direct materials budget for flout for the first quarter January February March Quarter Dozens of cookies to be produced 1000 12001 1300 3500 250 250 250 Cups pet dozen cookies Production needs 2500 3000 3250 Add: Desired ending inventory 300 325 275 10 Total needs O 325 3001 3025 2800 3200 Less Beginning inventory Cups to be purchased Cost percup Total cost of our 15 15 15 420 453.75 480 . Use the information provided in the Sweetums Cookies - Master Budget Project Prompt [posted in Canvas Week 6 module) to prepare the direct materials budget for all types of sugar for the first quarter January February March Quarter Dozens of cookies to be produced 1000 1200 1300 3500 Cups per dozen cookies 15 15 15 Production needs 1500 1800 1950 Add Desired ending inventory 180 195 165 Total needs Less Beginning inventory 0 180 195 Cups to be purchased 1680 1815 1920 Cost per Cup 0.15 015 Total cost of sugar 1252 27225 288 Bolo III 15 0 Use the information provided in the Sweetums Cookies - Master Budget Project Prompt (posted in Canvas Week 6 module) to prepare the direct materials budget for eggs for the first quarter January February March Quarter 10001 Dozens of cookies to be produced 12001 1300 3500 Eggs per dozen cookies 2 2 21 Production needs 2000 2400 26001 Add Desired ending inventory 240 260 220 OI Total needs 240 260 > Less Beginning inventory Eggsto be purchased 2240 2420 2560 1 1 OB10 Cost per egg Olo 224 242 256 Total cost of eggs . Use the information provided in the Sweetums Cookies. Master Budget Project Prompt (posted in Canvas Week 6 module) to prepare the direct materials budget for shortening for the first quarter January February March Quarter 1000 1200 1300 3500 Dozens of cookies to be produced Cups per dozen cookies 1 1000 1200 Production needs 1300 120 130 110 Add Desired ending inventory Total needs O 120 130 Less Beginning inventory 1120 1210 12801 Cups to be purchased 0.5 05 0,5 Cost per cup 560 505 540 Total cost of shortening >> 0 Use the information provided in the Sweetums Cookies - Master Budget Project Prompt (posted in Canvas Week 6 module) to prepare the direct materials budget for chocolate chips for the first quarter January February March Quarter Dozens of cookies to be produced 1000 1200 1300 3500 Cups per dozen cookies 2 2 Production needs 2000 2400 2600 240 260 Add Desited ending inventory 220 Total needs 0 240 260 Less Beginning inventory 2240 2420 12560 Cups to be purchased 1125 125 12 Cost per cup 12800 3025 13200 Total cost of chocolate chips OOOO OI OOO OOO SISS Use the information provided in the Sweetums Cookies. Master Budget Project Prompt (posted in Canvas Week 6 module) to prepare the cash disbursements for direct materials budget for the first quarter January February March Quarter January disbursements February disbursements March disbursements Total cash disbursements for materials Use the information provided in the Sweetums Cookies - Master Budget Project Prompt [posted in Canvas Week 6 module to prepare the manufacturing overhead budget for the first quartet January February March Quarter Dozens of cookies to be produced Variable manufacturing overhead pet dozen Budgeted variable manufacturing overhead Budgeted fixed manufacturing overhead Total budgeted manufacturing overhead Less Noncash costs Cash disbursements for manufacturing overhead Use the information provided in the Sweetums Cookies - Master Budget Project Prompt (posted in Canvas Week 6 module) to prepare the operating expenses budget for the first quarter March January 1000 February 1200 Quarter 3500 1300 Dozens of cookies to be produced Variable operating expenses per dozen Budgeted variable operating expenses Budgeted fixed operating expenses Total budgeted operating expenses Les Noncash costs Cash disbursements for operating expenses 3650 3650 3650 5150 5450 5600 Use the information provided in the Sweetums Cookies. Master Budget Project Prompt posted in Canvas Week 6 module to prepare the cash budget for the first quartet January February March Quarter Beginning cash balance 10000 Add Cash collections 7230 496 15180 Total cash available 17230 Less Disbursements Direct materials Manufacturing overhead Operating expenses Equipment purchases 20000 Total disbursements Excess deficiency of cash Financing Borrowings Repayments Interest Total financing Ending com balance