You work in the accounting department of XYZ Manufacturing, Inc. Your new assignment is to help prepare the master budget for the second quarter of 2023. You start with the following information:

Sales & cash collections:

The product sells for $26 per unit. Actual sales for March and forecasted sales for the next four months (in units) are:

March 22,200

April22,200

May16,000

June19,800

July22,200

The company expects 25% of sales to be for cash and the remaining 75% on credit. Receivables are collected in full in the month following the sale (none are collected in the month of the sale). The remaining accounts receivable from March which will be collected in April is $432,900.

Finished Goods:

Ending finished goods inventory should equal 80% of the next months expected sales in units.

The March 31 finished goods inventory is 17,760 units, which complies with the policy.

Raw materials inventory & payments for merchandise:

The ending raw material inventory should equal 50% of the next months raw materials needed for production. The March 31 raw materials inventory is 4,310 lbs, which complies with the policy. The expected June 30 ending raw materials inventory is 4,300 lbd.

Raw materials cost $20 per lb. Each finished unit requires 0.50 lbs of raw materials.

All raw materials purchases are on credit, and no payables arise from any other transactions. One months raw materials purchases are fully paid in the next month. The remaining accounts payable form March which will be paid in April is $194,798.

Other costs/payments:

The budgeted direct labor cost is $155,160 for April, $171,360 for May, and $195,480 for June, all of which will be paid in cash during the month incurred.

The total budgeted overhead cost is $50,994 for April, $58,694 for May, and $57,714 for June. Included in each months overhead estimate is depreciation of $25,134 per month.

The Selling & General Administrative Expense cash payments are $73,248 for April, $53,740 for May, and $67,632 for June.

Dividends of $13,000 are to be declared and paid in May.

Equipment purchases of $133,000 are budgeted for the last day of June.

Cash balances & borrowings:

The minimum ending cash balance for all months is $50,000. If necessary, the company borrows enough cash using a short-term note to reach the minimum.

Interest is paid on notes when the principle is paid.

The expected beginning cash balance is $43,000.

A note payable of $15,000 from March will be paid in April along with $150 of interest.

Required: Prepare the following budgets and schedules. All budgets and other financial information should be prepared for each month and the entire second calendar quarter.

1. Sales budget.

2. Schedule of cash collections.

3. Production budget.

4. Raw materials budget.

5. Cash budget.