Your company, Proxima, Inc, is one of the first companies in the US to make a...

  

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Your company, Proxima, Inc, is one of the first companies in the US to make a successful covid vaccine. Although Proixma is primarily a research company and not a distributor, you do have a limited number of vaccine units available to sell to the government. Your supervisor, Alice, has requested that you put together a power point presentation that she can use to get the CEO up to speed on Proxima's projected number of vaccine units available for sale. Projected sales in units for the first 5 months of 2021 are: January 10,000 10,500 13,000 16,000 15,500 February March April May The following data pertain to production policies and manufacturing specifications followed by Proxima: a) Finished goods inventory on January 1 is 900 units. The desired ending inventory for each month is 20% of the next month's sales. b) Only two types of drugs go into the vaccines. The data on materials used are as follows: Direct material Part #REM20 Per-Unit Usage Unit Cost $4.00 Part #HCL19 3 $7.00 Inventory policy dictates that sufficient materials be on hand at the beginning of the month to satisfy 30 percent of the next month's production needs. This is exactly the amount of material on hand on January 1. c) The direct labor used per unit of output is one and one-half hours. The average direct labor cost per hour is $20.00 d) Overhead each month is estimated using a flexible budget formula. (Activity is measured in direct labor hours.) Fixed Cost Variable-Cost Component Component Supplies $1.00 $0.20 $1.10 Power Maintenance $12,500 $14,000 $45,000 $ 4,300 $86,000 Supervision Depreciation Тахes Other $1.60 e) Monthly selling and administrative expenses are also estimated using a flexible budgeting formula. (Activity is measured in units sold). Variable Costs Fixed Costs $ 88,500 Salaries Commissions $1.40 Depreciation $ 25,000 Shipping Other $3.60 $1.60 $137,000 ) The unit selling price of one vial of the vaccination is $110. e) In February, the company plans to purchase land for future expansion. The land costs $68,000. h) All sales and purchases are for cash. The cash balance on January 1 equals $62,900. The firm wants to have an ending cash balance of at least $25,000. If a cash shortage develops, sufficient cash is borrowed to cover the shortage and provide the desired ending balance. Any cash borrowed must be borrowed in $1,000 increments and is repaid the following month, as is the interest due. The interest rate is 12 percent per annum. REQUIRED: Prepare a monthly operating budget for the first quarter with the following schedule: 1) Sales budget 2) Production budget 3) Direct materials purchases budget 4) Direct labor budget Your company, Proxima, Inc, is one of the first companies in the US to make a successful covid vaccine. Although Proixma is primarily a research company and not a distributor, you do have a limited number of vaccine units available to sell to the government. Your supervisor, Alice, has requested that you put together a power point presentation that she can use to get the CEO up to speed on Proxima's projected number of vaccine units available for sale. Projected sales in units for the first 5 months of 2021 are: January 10,000 10,500 13,000 16,000 15,500 February March April May The following data pertain to production policies and manufacturing specifications followed by Proxima: a) Finished goods inventory on January 1 is 900 units. The desired ending inventory for each month is 20% of the next month's sales. b) Only two types of drugs go into the vaccines. The data on materials used are as follows: Direct material Part #REM20 Per-Unit Usage Unit Cost $4.00 Part #HCL19 3 $7.00 Inventory policy dictates that sufficient materials be on hand at the beginning of the month to satisfy 30 percent of the next month's production needs. This is exactly the amount of material on hand on January 1. c) The direct labor used per unit of output is one and one-half hours. The average direct labor cost per hour is $20.00 d) Overhead each month is estimated using a flexible budget formula. (Activity is measured in direct labor hours.) Fixed Cost Variable-Cost Component Component Supplies $1.00 $0.20 $1.10 Power Maintenance $12,500 $14,000 $45,000 $ 4,300 $86,000 Supervision Depreciation Тахes Other $1.60 e) Monthly selling and administrative expenses are also estimated using a flexible budgeting formula. (Activity is measured in units sold). Variable Costs Fixed Costs $ 88,500 Salaries Commissions $1.40 Depreciation $ 25,000 Shipping Other $3.60 $1.60 $137,000 ) The unit selling price of one vial of the vaccination is $110. e) In February, the company plans to purchase land for future expansion. The land costs $68,000. h) All sales and purchases are for cash. The cash balance on January 1 equals $62,900. The firm wants to have an ending cash balance of at least $25,000. If a cash shortage develops, sufficient cash is borrowed to cover the shortage and provide the desired ending balance. Any cash borrowed must be borrowed in $1,000 increments and is repaid the following month, as is the interest due. The interest rate is 12 percent per annum. REQUIRED: Prepare a monthly operating budget for the first quarter with the following schedule: 1) Sales budget 2) Production budget 3) Direct materials purchases budget 4) Direct labor budget

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