Additional data

a$.$ Actual sales in December were $\backslash (\backslash$$ $71,000\backslash ).$ Selling price per unit is projected to remain stable at $\backslash (\backslash$$ $12\backslash )$ per unit throughout the budget period. Sales for the first five months of the upcoming year are budgeted to be as follows:

b$.$ Sales are $\backslash (35\backslash \%\backslash )$ cash and $\backslash (65\backslash \%\backslash )$ credit. All credit sales are collected in the month following the sale.

c$.$ Derry Manufacturing has a policy stating that each month's ending inventory of finished goods should be $\backslash (10\backslash \%\backslash )$ of the following month's sales $($in units$).$

d$.$ Of each month's direct material purchases, $\backslash (20\backslash \%\backslash )$ 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 $\backslash (\backslash$$ $2\mathrm{.}00\backslash )$ per pound. Ending inventory of direct materials should be $\backslash (20\backslash \%\backslash )$ 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 $0\mathrm{.}05.$ The direct labor rate per hour is $\backslash (\backslash$$ $9\backslash )$ 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:

f$.$ Monthly manufacturing overhead costs are $\backslash (\backslash$$ $5,500\backslash )$ for factory rent, $\backslash (\backslash$$ $2,900\backslash )$ for other fixed manufacturing expenses, and $\backslash (\backslash$$ $1\mathrm{.}10\backslash )$ per unit for variable manufacturing overhead. 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, Derry Manufacturing will purchase equipment for $\backslash (\backslash$$ $5,000\backslash )($cash$),$ while February's cash expenditure will be $\backslash (\backslash$$ $12,200\backslash )$ and March's cash expenditure will be $\backslash (\backslash$$ $16,600\backslash ).$

h$.$ Operating expenses are budgeted to be $\backslash (\backslash$$ $1\mathrm{.}25\backslash )$ per unit sold plus fixed operating expenses of $\backslash (\backslash$$ $1,800\backslash )$ per month. All operating expenses are paid in the month in which they are incurred. No depreciation is included in these figures.

i$.$ Depreciation on the building and equipment for the general and administrative offices is budgeted to be $\backslash (\backslash$$ $4,700\backslash )$ for the entire quarter, which includes depreciation on new acquisitions. f$.$ Monthly manufacturing overhead costs are $\backslash (\backslash$$ $5,500\backslash )$ for factory rent, $\backslash (\backslash$$ $2,900\backslash )$ for other fixed manufacturing expenses, and $\backslash (\backslash$$ $1\mathrm{.}10\backslash )$ per unit for variable manufacturing overhead. 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, Derry Manufacturing will purchase equipment for $\backslash (\backslash$$ $5,000\backslash )($cash$),$ while February's cash expenditure will be $\backslash (\backslash$$ $12,200\backslash )$ and March's cash expenditure will be $\backslash (\backslash$$ $16,600\backslash ).$

h$.$ Operating expenses are budgeted to be $\backslash (\backslash$$ $1\mathrm{.}25\backslash )$ per unit sold plus fixed operating expenses of $\backslash (\backslash$$ $1,800\backslash )$ per month. All operating expenses are paid in the month in which they are incurred. No depreciation is included in these figures.

i$.$ Depreciation on the building and equipment for the general and administrative offices is budgeted to be $\backslash (\backslash$$ $4,700\backslash )$ for the entire quarter, which includes depreciation on new acquisitions.

j$.$ Derry Manufacturing has a policy that the ending cash balance in each month must be at least $\backslash (\backslash$$ $4,000\backslash ).$ It has a line of credit with a local bank. The company can borrow in increments of $\backslash (\backslash$$ $1,000\backslash )$ at the beginning of each month, up to a total outstanding loan balance of $\backslash (\backslash$$ $140,000\backslash ).$ The interest rate on these loans is $\backslash (1\backslash \%\backslash )$ per month simple interest $($not compounded$).$ The company would pay down on the line of credit balance in increments of $\backslash (\backslash$$ $1,000\backslash )$ 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 $\backslash (30\backslash \%\backslash )$ of operating income less interest expense. The company pays $\backslash (\backslash$$ $10,000\backslash )$ cash at the end of February in estimated taxes.