Background Information

$-$ Googly uses a $**$monthly master budget$**$ for planning and control, developed in advance of the budget year.

$-**$Fiscal year$-$end:$**$ April $30.$

### $**$Sales Forecasts$**$

$-**$Year ended April $30,2025$:$**540,000$ units at $$22\mathrm{.}00$ each$*$

$-*$Based on actual sales to date $+$ budgeted sales for remaining months.$*$

$-**$Year ending April $30,2026$:$**560,000$ units at $$23\mathrm{.}00$ each.

$-**$Year ending April $30,2027$:$**580,000$ units at $$24\mathrm{.}00$ each.

### $**$Key Findings from Investigations$**$

$1.**$Sales Seasonality:$**$

$-$ Slow months $(6\%$ each$)$: January, March, May, June.

$-$ Moderate months $(8\%$ each$)$: July, August, September.

$-$ High sales $(9\%$ each$)$: February $($Valentine$$s$),$ April $($Easter$).$

$-$ Peak months: October $(10\%),$ November $(11\%),$ December $(13\%).$

$-$ Pattern expected to continue unchanged in $20262027.$

$2.**$Sales Collection Pattern:$**$

$-50\%$ in month of sale, $30\%$ the following month, $18\%$ month after, $2\%$ bad debt.

$-$ March $2025$ sales: $$726,000$; April $2025$ sales: $$1,089,000.$

$-$ Accounts Receivable at April $30,2025$: $$653,400($to be collected in May$/$June $2025).$

$3.**$Inventory Policy:$**$

$-$ Ending finished goods $=30\%$ of next month$$s sales.

$-$ Beginning inventory $($May $2025)$: $10,350$ units.

$4.**$Additional Warehouse Costs:$**$

$-$ October$$December: $$20,000/$month $($paid at start of month$).$

$5.**$Raw Materials $($HA$)$:$**$

$-0\mathrm{.}5$ kg HA per unit at $$15\mathrm{.}00/$kg$.$

$-$ Ending HA inventory $=40\%$ of next month$$s production needs.

$-$ Beginning HA inventory $($May $2025)$: $6,900$ kg$.$

$6.**$Material Purchases Payments:$**$

$-45\%$ in the month of purchase, $30\%$ next month, $25\%$ two months later.

$-$ Accounts Payable at April $30,2025$: $$244,744($from March$/$April $2025$ purchases$).$

HA purchases in March, $2025$: $$305,775$

HA purchases in April, $2025$ $$306,000$

$7.**$Direct Labor:$**$

$-$ $$20/$hour; $0\mathrm{.}15$ hours$/$unit$.$

$-40$ full$-$time employees $($min$.160$ hours$/$month each$).$

$-$ Temporary workers hired as needed at $$20/$hour$.$

$8.**$Manufacturing Overhead:$**$

$-$ Variable: $$4\mathrm{.}00/$unit$.$

$-$ Fixed: $$960,000/$year $($includes $$192,000$ depreciation$).$

$-$ Paid evenly, except depreciation.

$9.**$Selling & Administrative Expenses:$**$

$-$ Fixed: $$924,000/$year $($includes $$4,750/$month office depreciation$).$

$-$ Starting $2026$: $$1/$unit sales commission $($excluded from above$)$

$10.**$Income Taxes:$**$

$-35\%$ rate.

$-$ Monthly installments of $$50,000$ in $2026.$

$-$ April $2025$ taxes $($$$155,000)$ paid December $2025.$

$-$ April $2026$ taxes $($excess of installments$)$ paid December $2026.$

$11.**$Capital Expenditure:$**$

$-$ New equipment: $$1,000,000($paid in $8$ installments of $$125,000$ from July $2025).$

$12.**$Financing:$**$

$-$ Minimum cash balance: $$50,000.$

$-$ Line of credit: $8\mathrm{.}4\%$ annum interest $(0\mathrm{.}7\%/$month$).$

$-$ Borrowing$/$repayment in $$1,000$ multiples.

$-$ Loan balance at April $30,2025$: $$225,000.$

$13.**$Dividends:$**$

$-$ $$30,000/$month $($paid monthly$).$

$14.**$April $3$