10 Waterways Continuing Problem Waterways Continuing Problem (This is a continuation of the Waterways Problem from Chapters 1 through 8.) WCP9 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 fol- lowing 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 Unit selling price 137,500 $12 Waterways likes to keep 100% 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 receiv- able 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. Indirect labor 30 per labor hour Utilities Maintenance Salaries Depreciation 50 per labor hour 45 per labor hour 25 per labor hour $42,000 per month $16,800 per month Property taxes $ 2,675 per month Insurance $ 1,200 per month Janitorial Selling and Administrative $ 1,300 per month Variable selling and administrative cost per unit is $1.60. Advertising Insurance Salaries Depreciation Other fixed costs $15,000 a month $1,400 a month $72,000 a month $ 2,500 a month $ 3,000 a month