Andy's Co. is a manufacturing firm of a computer hardware device. Its sales forecasts for the year 2020 is as follows:

Quarter

Sales in units

Price

Revenue

Q1, 2020

500

$400

$200,000

Q2, 2020

1000

400

400,000

Q3, 2020

1000

400

400,000

Q4, 2020

1000

400

400,000

Q1, 2021

2000

400

800,000

Q2, 2021

1500

400

600,000

Q3, 2021

1000

$400

$400,000

The company will start its business this year with $30,000 of cash balance. As of Q4 of the fiscal year 2019, it does not have any material, work in progress, or finished goods inventories. The company currently has no debt and entirely owned by shareholders. The balance sheet of Andy's Co. as of the end of the year 2019 is as follows:

Cash

30,000

Equity

30,000

Direct material costs per unit are $150. Each unit requires three direct labor hours to be completed. The hourly wage is $40. For the year 2020, the company expects the variable overhead to be $136,000. The company allocates variable overhead by direct labor hours. Fixed overhead is expected to be $204,000, including the depreciation of the equipment ($47,500). The company will evenly allocate the fixed overhead for each quarter.

At the beginning of the year 2020, the company will invest in $95,000 for the equipment.

The company supplies products with no material selling and administrative expenses. Their products are immediately picked up by other manufacturers in the complex for cash. Due to the highly efficient just-in-time inventory management system, the company does not hold materials inventories. All materials are purchased just enough to be used in production each quarter. The company also does not hold work in progress inventories. However, they keep 10% of next quarter's sales as ending inventories of finished goods.

The company also engages in flexible cash management. They require a minimum balance of zero. Whenever they run short of cash, they can borrow from a partnered venture capital at the quarterly interest rate of 2%. They obtain the short-term loan at the beginning of the quarter, and they repay both principal and interest at the end of the quarter if they have enough cash.

The company will incur 20% of taxable income (operating income less interest expenses) as tax expenses but will pay the income taxes in the year 2021.

Required:

1) Complete the sales budget of Andy's Co. for the fiscal year 2020

2) Complete the production budget of Andy's Co. for the fiscal year 2020

3) Complete the Direct Labor budget of Andy's Co. for the fiscal year 2020

4) Complete the direct materials purchased budget for Andy's Co. for the fiscal year 2020

5) Complete the overhead budget including the cash disbursement for Andy's Co. for the fiscal year 2020

6) Complete the cost of goods manufactured budget for Andy's Co. for the fiscal year 2020

7) Complete the cost of goods sold budget for Andy's Co. for the fiscal year 2020

8) Complete the cash budget for Andy's Co. for the fiscal year 2020

9) Complete the income statement for Andy's Co. for the fiscal year 2020

10) Complete the balance sheet for Andy's Co. for the fiscal year 2020

11) An alternative plan for operation requires more investment in the equipment. If the company can invest $210,000 instead of $95,000 in the equipment at the beginning of the year 2020, the company can reduce direct labor hours required for each unit to 2 hours. The depreciation of the equipment will be $105,000 for the year 2020. Calculate the impacts of the additional investment on net income and operating cash flows for the year 2020. You can present an alternative income statement, cash budget, and balance sheet.

12) The executives of Andy's Co. are debating over whether to invest $95,000 or $210,000. The market analysts suggest that the demand for the products will be at a similar level over the next few years. Based on the sales forecasts of the market analysts, provide advice to the executives. Support your advice quantitatively.