Developing a Master Budget for a Manufacturing Organization Cubs Incorporated manufactures a product with a selling price of $60 per unit. Units and monthly cost data follow: Variable: Selling and administrative Direct materials Direct labor Variable manufacturing overhead Fixed: Selling and administrative Manufacturing (including depreciation of $ 11,000) $5 per unit sold 12 per unit manufactured 12 per unit manufactured 6 per unit manufactured $17,000 per month 34,000 per month 34,00 Cubs, Inc. pays all bills in the month incurred. All sales are on account with 50 percent collected the month of sale and the balance collected the following month. There are no sales discounts or bad debts. Cubs, Inc. desires to maintain an ending finished goods inventory equal to 20 percent of the following month's sales and a raw materials inventory equal to 10 percent of the following month's production. January 1, 2017, inventories are in line with these policies. Actual unit sales for December and budgeted unit sales for January, February, and March of 2017 are as follows: CUBS INCORPORATED Sales Budget For the Months of January, February, and March 2017 Month December January February March Sales - Units 11,250 10,000 15,000 13,000 Sales - Dollars $675,000 $600,000 $900,000 $780,000 Additional information: The January 1 beginning cash is projected as $6,000. For the purpose of operational budgeting, units in the January 1 inventory of finished goods are valued at variable manufacturing cost. Each unit of finished product requires one unit of raw materials. Cubs, Inc. intends to pay a cash dividend of $12,000 in January. NOTE: For the entire problem - do not use any negative signs with your answers unless appropriate for net income(loss) or ending balance. (a) A production budget for January and February. Cubs Incorporated Production Budget For the Months of January and February 2017 January February March Requirements for current sales 10,000 ~ 15,000 13,000 Desired ending inventory 3,000 2,600 Total requirements 13,000 17,600 Less beginning inventory 2,000 3,000 Production requirements 11,000 14,600 (b) A purchases budget in units for January. Cubs Incorporated Purchases Budget For the Month of January 2017 January February Current requirements (units) 11,000 14,600 Desired ending inventory 1,460 Total requirements 12,460 Less beginning inventory 1,100 Purchases (units) 11,360 Purchases (dollars at $12 each) $ 136,320 (c) A manufacturing cost budget for January. Cubs Incorporated Manufacturing Cost Budget For the Month of January 2017 Variable costs Direct materials $ 132,000 Direct labor 132,000 Variable manufacturing overhead 66,000 Total variable costs 330,000 Fixed manufacturing overhead 34,000 Total manufacturing overhead $ 364,000