Developing a Master Budget for a Manufacturing Organization: Challenge Problem Electric Monkey Computer Accessories assembles a computer networking device from kits of imported components. You have been asked to develop a quarterly and annual operating budget and pro forma income statements for next year. You have obtained the following information:

Beginning-of-year balances
Cash	$75,000
Accounts receivable (previous quarter's sales)	$245,000
Raw materials	950	kits
Finished goods	1,500	kits
Accounts payable (materials)	$125,000
Borrowed funds	$30,000
Desired end-of-year inventory balances
Raw materials	1,000	kits
Finished goods	1,600	kits
Desired end-of-quarter balances
Cash	$30,000
Raw materials as a portion of the following quarter's production	0.20
Finished goods as a portion of the following quarter's sales	0.30
Manufacturing costs
Standard cost per unit	Units	Unit price	Total
Direct labor hours at rate	0.50 hour	$30.00	$15.00
Raw materials	1 kit	$75.00	75.00
Variable overhead/labor hour	0.50 hour	$5.00	2.50
Total standard variable cost			$92.50
Fixed cost per quarter
Cash	$110,000
Depreciation	15,000
Total	$125,000
Selling and administrative costs	$8.00
Variable cost per unit
Fixed costs per quarter
Cash	$150,000
Depreciation	7,500
Total	$157,500
Interest rate per quarter	0.015
Portion of sales collected
Quarter of sale	0.70
Subsequent quarter	0.29
Bad debts	0.01
Portion of purchases paid
Quarter of purchase	0.60
Subsequent quarter	0.40
Unit selling price	$225
Sales forecast
Quarter	First	Second	Third	Fourth
Unit sales	4,400	4,600	4,500	4,800

Additional information All cash payments except purchases are made quarterly as incurred. All borrowings occur at the start of a quarter. All repayments on borrowings occur at the end of a quarter. At the time the principal is repaid, interest is paid on the portion of principal that is repaid. Borrowings and repayments may be made in any amount Required Note: Do not use negative signs with any of your answers in the requirements that follow.

• Part A
• Part B
• Part C
• Part D
• Part E
• Part F
• Part G

a. A sales budget for each quarter and the year.

Electric Monkey Computer Accessories
Sales Budget
For the Year Ending December 31
	First	Second	Third	Fourth	Total
Unit sales	Answer 1	Answer 2	Answer 3	Answer 4	Answer 5
Sales revenue	Answer 6	Answer 7	Answer 8	Answer 9	Answer 10