Presidio Manufacturing is preparing its master budget for the first quarter of the upcoming year. The following data pertain to Presidio Manufacturing's operations:
Current assets as of December 31 (prior year):
Cash..................................................................................................................... $ 4,600
Accounts receivable, net..................................................................................... $ 50,000
Inventory.............................................................................................................. $ 15,000
Property, plant, and equipment, net...................................................................... $ 120,000
Accounts payable.................................................................................................... $ 43,000
Capital stock............................................................................................................ $ 126,000
Retained earnings................................................................................................... $ 23,200


a. Actual sales in December were $ 71,000. Selling price per unit is projected to remain stable at $ 12 per unit throughout the budget period. Sales for the first five months of the upcoming year are budgeted to be as follows:
January................................................................................................................... $ 99,600
February................................................................................................................. $ 118,800
March..................................................................................................................... $ 115,200
April........................................................................................................................ $ 108,000
May......................................................................................................................... $ 103,200

b. Sales are 35% cash and 65% credit. All credit sales are collected in the month following the sale.
c. Presidio Manufacturing has a policy that states that each month's ending inventory of finished goods should be 10% of the following month's sales ( in units).
d. Of each month's direct materials purchases, 20% are paid for in the month of purchase, while the remainder is paid for in the month following purchase. Three pounds of direct material is needed per unit at $ 2.00 per pound. Ending inventory of direct materials should be 20% of next month's production needs.
e. Most of the labor at the manufacturing facility is indirect, but there is some direct labor incurred. The direct labor hours per unit is 0.05. The direct labor rate per hour is $ 9 per hour. All direct labor is paid for in the month in which the work is performed. The direct labor total cost for each of the upcoming three months is as follows:
January....................................................................................................................... $ 3,807
February..................................................................................................................... $ 4,442
March......................................................................................................................... $ 4,293
f. Monthly manufacturing overhead costs are $ 5,500 for factory rent, $ 2,900 for other fixed manufacturing expenses, and $ 1.10 per unit for variable manufacturing over-head. No depreciation is included in these figures. All expenses are paid in the month in which they are incurred. .
g. Computer equipment for the administrative offices will be purchased in the upcoming quarter. In January, the company will purchase equipment for $ 5,000 (cash), while February's cash expenditure will be $ 12,200 and March's cash expenditure will be $ 16,600.
h. Operating expenses are budgeted to be $ 1.25 per unit sold plus fixed operating expenses of $ 1,800 per month. All operating expenses are paid in the month in which they are incurred.
i. Depreciation on the building and equipment for the general and administrative offices is budgeted to be $ 4,600 for the entire quarter, which includes depreciation on new acquisitions.
j. Presidio Manufacturing has a policy that the ending cash balance in each month must be at least $ 4,000. The company has a line of credit with a local bank. It can borrow in increments of $ 1,000 at the beginning of each month, up to a total out-standing loan balance of $ 160,000. The interest rate on these loans is 1% per month simple interest (not compounded). The company would pay down on the line of credit balance in increments of $ 1,000 if it has excess funds at the end of the quarter. The company would also pay the accumulated interest at the end of the quarter on the funds borrowed during the quarter.
k. The company's income tax rate is projected to be 30% of operating income less interest expense. The company pays $ 10,000 cash at the end of February in estimated taxes.

Requirements
1. Prepare a schedule of cash collections for January, February, and March, and for the quarter in total.

2. Prepare a production budget.

3. Prepare a direct materials budget.

4. Prepare a cash payments budget for the direct material purchases from Requirement 3.

5. Prepare a cash payments budget for direct labor, using the following format:

6. Prepare a cash payments budget for manufacturing overhead costs.

7. Prepare a cash payments budget for operating expenses.

8. Prepare a combined cash budget.

9. Calculate the budgeted manufacturing cost per unit (assume that fixed manufacturing overhead is budgeted to be $ 0.70 per unit for the year).

10. Prepare a budgeted income statement for the quarter ending March31.

Cash Collections Budget For the Quarter Ended March 31 Month 4. h sales 6 Credit sales 7 Total cash collections Production Budget For the Quarter Ended March 31 Month anuary February March 4 Quarter Unit sales 6 Plus: Desired ending inventory 7 Total needed 8 es: Beginning inv entory 9 Number of units to produce 10 Direct Materials Budget or the Quarter Ended March 3 2 Month nury Fobruary March Quarter 4. 5 Units to be produced (from Production Budget) 6 Multiply by: Quentity (pounds) of DM needed per unit 7 Quantity (pounds) needed for production 8 Plus: Desired ending inventory of DM 9 Total quantity (pounds) needed 10 Less: Beginning inventory of DM 11 Quantity (pounds) to purchas 12 Multipy by: Cost per pound 13 Total cost of DM purchases 14 Cas Payments for Direct Materials Budget For the Quarter Ended March 31 2 Month February January March Quarter 20% of current month DM purchases 80% of current month DM purchases otal cash payments Cash Payments for Direct Labor Budget For the Quarter Ended March 31 3 4 January February March Quarter Total cost of directlabor Cash Payments for Manufacturing Overhead Budget For the Quarter Ended March 31 Month February 3 March Quarter anuary 5 Variable manufacturing overhead costs 6 Rent tued 7 Other ixed MOH 8 Cash payments for manufacturing overhead Cash Payments for Operating Expenses Budget For the Quarter Ended March 31 3 Month February- March January Quarter 5 Varlable oper ating expenses 6 Fixed operating expenses 7 Cash payments for operating oxpenses Combined Cash Budget for the Quarter Ended March 31 3 Month anuary February Quarter 5 Beginning cash balance 6 Plus: Cash collections 7 Total cash available 8 Less cash payments Direct material purchases 10 Direct labor 11 Manufacturing overhead costs 12Operating expenses 13 Tax payment 14 Equipment purchases 15 Total cash payments 16 Ending cash balance before financing | Financing: 18 Plus: New borrowings 19Less: Debt repayments 20 Less: Interest payments 21 Ending cash balance Budgeted Manufacturing Cost per Unit 3 Direct materials cost per unit 4 Direct labor cost per unit 5 Variable manufacturing overhead costs per unit 6 Fxed manufacturing overhead costs per unit 7 Budgeted cost of manufacturing one unit