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15 Dec 2018

Colter Company prepares monthly cash budgets. Relevant data fromoperating budgets for 2017 are as follows:

January February

Sales 360,000 $400,000

Direct materials purchases 120,000 125,000

Direct labor 90,000 100,000

Manufacturing overhead 70,000 75,000

Selling and administrative expenses 79,000 85,000

All sales are on account. Collections are expected to be 50% inthe month of sale, 30% in the first month following the sale, and20% in the second month following the sale. Sixty percent (60%) ofdirect materials purchases are paid in cash in the month ofpurchase, and the balance due is paid in the month following thepurchase. All other items above are paid in the month incurredexcept for selling and administrative expenses that include $1,000of depreciation per month.

Other data:

1. Credit sales: November 2016, $250,000; December 2016,$320,000.

2. Purchases of direct materials: December 2016, $100,000.

3. Other receipts: January—Collection of December 31, 2016,notes receivable $15,000; February—Proceeds from sale of securities $6,000.

4. Other disbursements: February—Payment of $6,000 cashdividend.

The company’s cash balance on January 1, 2017, is expected to be$60,000. The company wants to maintain a minimum cash balance of$50,000.

Prepare schedules for (1) expected collections from customersand (2) expected payments for direct materials purchases forJanuary and February.

Prepare a cash budget for January and February in columnarform.

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Elin Hessel
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17 Dec 2018

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Blue Spruce Corp. prepares monthly cash budgets. Here arerelevant data from operating budgets for 2017.

January February

Sales $360,700 $401,100

Purchases 121,500 131,400

Salaries 84,600 81,000

Administrative expenses 71,000 73,700

Selling expenses 79,000 86,900

All sales and purchases are on account. Budgeted collections anddisbursement data are given below. All other expenses are paid inthe month incurred except for administrative expenses, whichinclude $1,200 of depreciation per month.

Other data.

1. Collections from customers: January $328,100;February$378,200.

2. Payments for purchases: January $111,400;

February $144,900.

3. Other receipts: January: collection of December 31, 2016,notes receivable $18,400; February: proceeds from sale ofsecurities $5,500.

4. Other disbursements: February $13,000 cash dividend.

The company’s cash balance on January 1, 2017, is expected to be$47,400. The company wants to maintain a minimum cash balance of$45,910.

Prepare a cash budget for January and February.

Waterways Corporation is preparing its budget for the coming year, 2017. The first step is to plan for the first quarter of that coming year. Waterways gathered the following information from the managers:

Sales

Unit sales for November 2016 112,500

Unit sales for December 2016 102,100

Expected unit sales for January 2017 113,000

Expected unit sales for February 2017 112,500

Expected unit sales for March 2017 116,000

Expected unit sales for April 2017 125,000

Expected unit sales for May 2017 137,500

Unit selling price $12

Waterways likes to keep 10% of the next month’s unit sales in ending inventory. All sales are on account. 85% of the Accounts Receivable are collected in the month of sale, and 15% of the Accounts Receivable are collected in the month after sale. Accounts receivable on December 31, 2016, totaled $183,780.

Direct Materials

Item Amount Used per Unit Inventory, Dec. 31

Metal 1 lb @ 58¢ per lb. 5,177.5 lbs

Plastic 12 oz @ 6¢ per oz 3,883.125 lbs

Rubber 4 oz @ 5¢ per oz 1,294.375 lbs

2 lbs per unit 10,355.0 lbs

Metal, plastic, and rubber together are 75¢ per pound per unit.

Waterways likes to keep 5% of the materials needed for the next month in its ending inventory. Payment for materials is made within 15 days. 50% is paid in the month of purchase, and 50% is paid in the month after purchase. Accounts Payable on December 31, 2016, totaled $120,595. Raw Materials on December 31, 2016, totaled 11,295 pounds.

Direct Labor

Labor requires 12 minutes per unit for completion and is paid at a rate of $8 per hour.

Manufacturing Overhead

Indirect materials 30¢ per labor hour

Indirect labor 50¢ per labor hour

Utilities 45¢ per labor hour

Maintenance 25¢ per labor hour

Salaries $42,000 per month

Depreciation $16,800 per month

Property taxes $ 2,675 per month

Insurance $ 1,200 per month

Janitorial (Maintenance) $ 1,300 per month

Selling and Administrative

Variable selling and administrative cost per unit is $1.60.

Advertising $15,000 a month

Insurance $ 1,400 a month

Salaries $72,000 a month

Depreciation $ 2,500 a month

Other fixed costs $ 3,000 a month

Other Information

* The Cash balance on December 31, 2016, totaled $100,500, but management has decided it would like to maintain a cash balance of at least $800,000 beginning on January 31, 2017.

* Dividends are paid each month at the rate of $2.50 per share for 5,000 shares

outstanding.

* The company has an open line of credit with Romney’s Bank. The terms of the agreement requires borrowing to be in $1,000 increments at 8% interest. Waterways borrows on the first day of the month and repays on the last day of the month.

* A $500,000 equipment purchase is planned for February.

Instructions

For the first quarter of 2017, do the following.

(a) Prepare a sales budget.

(b) Prepare a production budget.

(c) Prepare a direct materials budget.

(d) Prepare a direct labor budget.

(e) Prepare a manufacturing overhead budget.

(f) Prepare a selling and administrative budget.

(g) Prepare a schedule for expected cash collections from customers.

(h) Prepare a schedule for expected payments for materials purchases.

(i) Prepare a cash budget.

help me to do the budgeted income statement (in jan.feb,march) not broken down into 3, schedule of collection in sales( month 1-3),schedule of payment of manufactory cost (month 1-3) and cash budget (month 1-3)

Please show work

1) Sales Budget
2) Production Budget
3) Direct Materials Purchases Budget
4) Direct Labour Cost Budget
5) Factory Overhead Cost Budget
6) Selling and Administrative Expenses Budget
7) Budgeted Income Statement
8) Schedule of Collections from Sales
9) Schedule of Payments for Manufacturing Costs
10) Cash Budget
All budgets should be for the individual three (3) months of the first quarter of 2017.
Include a quarterly total column on the right side. (except for #7 and #10)
Each budget/requirement should be in a separate tab within one spreadsheet.
All pages should be in portrait format using the same font type and size.
Please staple the printed copy in the upper left corner.
Total Assets $1,315,625.78
LIABILITIES AND STOCKHOLDERS EQUITY
Accounts Payable $5,755.15
Interest Payable -
Income Tax Payable -
Short Term Borrowings -
Total Current Liabilities 5,755.15
Long-Term Notes Payable 436,000.00
Total Liabilities 441,755.15
Common Stock ($5.00 Par) $475,000.00
Paid in Capital 100,000.00
Retained Earnings 298,870.63
Total Stockholders Equity 873,870.63
Total Liabilities and Stockholders Equity $1,315,625.78
1. Sales
2016 Actual Sales 2017 Estimated Sales
Nov Dec Jan Feb Mar Apr May
Units 7,835 7,970 7,450 7,090 8,320 9,070 10,120
The selling price per unit has remained constant for the past year and is expected to
remain unchanged throughout the first quarter of 2017 at an amount of $68.99
2. Cash Collection Policy
Total sales consist of the following:
Cash sales: 5%
Credit sales: 95%
Credit collections are as follows:
In the month following the month of sale: 75%
In the second month following the month of sale: 25%
The Company does not have any bad debts.
3. Production Policy
The Company's policy is to produce during each month, enough units to meet the current
month's sales as well as a desired inventory at the end of the month which should be
equal to 23% of next month's estimated sales. On December 31, 2016, the finished
goods inventory consisted of 1,714 units at a cost of $50.40.
4. Direct Materials Purchasing Policy
Each month the Company purchases enough direct materials to meet that month's
production requirements and an amount equal to 25% of the next month's estimated
production requirements. Each unit of finished product requires 2.83 pounds of direct
materials at a cost of $1.38 per pound. On December 31, 2016, the direct materials
inventory consisted of 5,213 lbs. at a cost of $1.38.
Payments are made as follows:
In the month of purchase: 80%
In the following month the balance: 20%
The accounts payable balance of $5,755.15 as of December 31, 2016, represents 20% of
purchases made in December 2016 to be paid in January 2017.
5. Direct Labor Costs
Direct labor hours required per unit of finished product: 1.75
Average rate per direct labor hour: $12.25
6. Factory Overhead
The Company applies variable factory overhead cost at the rate of 120% of direct
labor cost and fixed factory overhead on the basis of the number of direct labor hours.
The company has the following fixed overhead expenses per month:
Factory supervisor's salary $54,000.00
Factory rent 6,000.00
Factory insurance 6,500.00
Depreciation of factory equipment 600
All factory overhead costs, except depreciation, are paid for in cash during the
month in which they are incurred.
7. Selling and Administrative Expenses
Variable selling expenses are:
Freight out $0.80 per unit
Sales commissions 1% of sales
Fixed selling and administrative expenses per month are:
Salaries $8,700.00
Rent 1,800.00
Advertising 150
Insurance 250
Depreciation (excluding depreciation of
computer to be purchased at the end
of January 2017 10,050.00
8. Income Taxes
Combined tax rate is 30% of Income before taxes computed at the end of the
quarter ending March 31, 2017 , payable in the second quarter.
9. Capital Expenditures
The Company expects to buy a new computer on January 31, 2017, for use in the sales and
administrative offices at a cost of $180,000.00, which will be paid in cash. Monthly
depreciation expense will be an additional $3,000.00 .
10. Financing Policy
On March 31, 2017, the Company is scheduled to pay $300,000.00 , of the long-term notes
payable plus interest expense for the first quarter at a rate of 12%
With respect to short-term borrowing, the Company's policy is to borrow at the beginning
of a month with an anticipated cash deficiency. A minimum cash balance of $25,000.00 is
required of the end of each month. The Company repays the principal of such short-term
borrowing at the end of the first following month to the extent of anticipated excess cash.
Interest must be paid the following month at a rate of 12%. Borrowing and principal
repayments are made in multiples of $1,000.00 .
11. Investing Policy
Investments earn interest of the rate of 6% per annum which is credited to our Checking
account by the bank at the beginning of the following month. You may assume that the balance
of Marketable Securities at December 31, 2016, was outstanding throughout the entire month.
12. General Information
Use proper rounding and show two (2) decimal places of accuracy on dollar amounts.
Round up and show whole amounts on all other figures.

Vettel Manufacturing
Sales Budget

For the Quarter Ending March 31, 2017
January February March Q1 Total
Budgeted Sales (Units) 7450 7090 8320 22860
Selling Price Per Unit $68.99 $68.99 $68.99 $68.99
Total budgeted sales $513,975.50 $489,139.10 $573,996.80 $1,577,111.40

Vettel Manufacturing

Production Budget

For the Quarter Ending March 31, 2017
January February March Q1 Total
Forecasted Units Sold 7,450 7,090 8,320 22,860
Plus Desired Ending Inventory 1,631 1,914 2,087 2,087
Total 9,081 9,004 10,407 24,947
Less Estimated Beginning Units 1,714 1,631 1,914 1,714
Total Units to Produced 7,367 7,373 8,493 23,233
Vettel Manufacturing, Inc.
Direct Materials Purchases Budget
For the Quarter Ending March 31, 2017
January February March April Quarter 1
---------------------------------------------------------------------------------------------------- ----------------------

Required Production Units

 7,367 7,373 8,493 9311 23,233

Pounds of DM per Unit

 2.83 2.83 2.83 2.83 2.83
---------------------------------------------------------------------------------------------------- ----------------------

Total DM Required for Production

 20,849 20,866 24,035 26,350 65,749

DM Purchases (75% of current mon)

 15637 15650 18026 19763

(25% of next mon

 5217 6009 6588

Total DM Purchases

 20,853 21,658 24,614 67,125
Unit Price 1.38 1.38 1.38 -
---------------------------------------------------------------------------------------------------- ----------------------
DM Purchase Cost 28777.49 29888.39 33967.02 92632.89

==========================================

 ============
Vettel Manufacturing, Inc.
Direct Labour Cost Budget
For the Quarter Ending March 31, 2017
January February March Quarter 1
---------------------------------------------------------------------------------------------------- ----------------------
Budgeted Units of Production 7367 7373 8493 23233

Direct Labor Hours Required Per Unit

 1.75 1.75 1.75 1.75
---------------------------------------------------------------------------------------------------- ----------------------
Total Direct Hours Labor Required 12892 12903 14863 40658
Hourly Rate $ 12.25 $ 12.25 $ 12.25 $ 12.25
---------------------------------------------------------------------------------------------------- ----------------------
Total Direct Labor Cost $ 157,927.00 $ 158,061.75 182071.75 $ 498,060.50

==========================================

 ============
Selling and Admin Budget'!E5= 7. Selling and Administrative Expenses
Selling and Administrative Expenses Budget Variable selling expenses are:
For the Quarter Ending March 31, 2017 Freight out $0.80 per unit
January February March Quarter 1 Sales commissions 1% of sales
Sales Units 7,450 7,090 8,320 22,860
Sales $ 513,975.50 $ 489,139.10 $ 573,996.80 $ 1,577,111.40
---------------------------------------------------------------------------------------------------- ---------------------- Fixed selling and administrative expenses per month are:
Variable Selling and Administrative Expenses: Salaries $8,700.00
Freight Out ($0.80 per unit) $ 5,960.00 $ 5,672.00 $ 6,656.00 $ 18,288.00 Rent 1,800.00
Sales Commissions (1% of sales) $ 5,139.76 $ 4,891.39 $ 5,739.97 $ 15,771.12 Advertising 150
---------------------------------------------------------------------------------------------------- ----------------------
Total Variable Selling and Administrative Expenses $ 11,099.76 $ 10,563.39 $ 12,395.97 $ 34,059.12 Insurance 250
---------------------------------------------------------------------------------------------------- ---------------------- Depreciation (excluding depreciation of

Fixed Selling and Administrative Expenses:

 computer to be purchased at the end
Salaries $ 8,700.00 $ 8,700.00 $ 8,700.00 $ 26,102.00 of January 2017 10,050.00
Rent $ 1,800.00 $ 1,800.00 $ 1,800.00 $ 5,402.00
Advertising $ 150.00 $ 150.00 $ 150.00 $ 452.00
Insurance $ 250.00 $ 250.00 $ 250.00 $ 752.00
Depreciation $ 10,050.00 $ 10,050.00 $ 10,050.00 $ 30,152.00
---------------------------------------------------------------------------------------------------- ----------------------
Total Fixed Selling and Administrative Expenses $ 20,950.00 $ 20,950.00 $ 20,950.00 $ 62,850.00
---------------------------------------------------------------------------------------------------- ============
Total Selling and Administrative Expenses $ 32,049.76 $ 31,513.39 $ 33,345.97 $ 96,909.12


Vettel Manufacturing, Inc.
Factory Overhead Cost Budget
For the Quarter Ending March 31, 2017
January February March Quarter 1

Supervisor Salaries

 54,000 54,000 54,000 162,000
Factory Rent 6,000 6,000 6,000 18,000

Factory Insurance

 6,500 6,500 6,500 19,500

Depreciation of Factory Equipment

 600 600 600 1,800

Total Factory Overhead Cost

 67,100 67,100 67,100 201,300

Variable factory overhead

 189512.40 189674.10 218486.10 597672.6

Total Factory Overhead Cost

 256,612.40 256,774.10 285,586.10 798,972.60

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