waterways continuing problem

Project Description:

waterways corporation is preparing its budget for the coming year, 2014. 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 2013 112,500
unit sales for december 2013 102,100
expected unit sales for january 2014 113,000
expected unit sales for february 2014 112,500
expected unit sales for march 2014 116,000
expected unit sales for april 2014 125,000
expected unit sales for may 2014 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, 2013, 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, 2013, totaled $120,595. raw materials on december 31, 2013, 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 $ 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
waterways continuing problem 11
other information
the cash balance on december 31, 2013, totaled $100,500, but management has decided
it would like to maintain a cash balance of at least $800,000 beginning on january 31,
2014. 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 2014, do the following.
(a) prepare a sales budget.
(b) prepare a production budget.
(c) prepare a direct materials budget. (round to nearest dollar)
(d) prepare a direct labor budget. (for calculations, round to the nearest hour.)
(e) prepare a manufacturing overhead budget. (round amounts to the nearest dollar.)
(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. (round totals to
nearest dollar)
(i) prepare a cash budget.
Skills Required:
Project Stats:

Price Type: Negotiable

Refunded
Total Proposals: 14
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