Developing a Master Budget for a Manufacturing Organization Cubs Incorporated manufactures a product with a selling price of $75 per unit. Units and monthly cost data follow:

Variable:
Selling and administrative	$ 3 per unit sold
Direct materials	15 per unit manufactured
Direct labor	5 per unit manufactured
Variable manufacturing overhead	7 per unit manufactured
Fixed:
Selling and administrative	$160,000 per month
Manufacturing (including depreciation of $ 15,000)	150,000 per month

Cubs Inc. pays all bills in the month incurred. All sales are on account with 50% 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 40% of the following months sales and a raw materials inventory equal to 20% of the following months production. January 1 inventories are in line with these policies.

Actual unit sales for December and budgeted unit sales for January, February, and March are as follows:

CUBS INCORPORATED Sales Budget For the Months of January, February, and March
Month	December	January	February	March
Sales - Units	10,000	12,000	11,500	12,500
Sales - Dollars	$750,000	$900,000	$862,500	$937,500

Additional information:

• The January 1 beginning cash is projected as $10,000.
• 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 $15,000 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
	January	February	March
Requirements for current sales	Answer	Answer	Answer
Desired ending inventory	Answer	Answer
Total requirements	Answer	Answer
Less beginning inventory	Answer	Answer
Production requirements	Answer	Answer

(b) A purchases budget in units for January.

Cubs Incorporated Purchases Budget For the Month of January
	January	February
Current requirements (units)	Answer	Answer
Desired ending inventory	Answer
Total requirements	Answer
Less beginning inventory	Answer
Purchases (units)	Answer
Purchases (dollars)	Answer

c) A manufacturing cost budget for January.

Cubs Incorporated Manufacturing Cost Budget For the Month of January
Variable costs
Direct materials	Answer
Direct labor	Answer
Variable manufacturing overhead	Answer
Total variable costs	Answer
Fixed manufacturing overhead	Answer
Total manufacturing overhead	Answer

(d) A cash budget for January.

Cubs Incorporated Cash Budget For the Month of January
Beginning balance		Answer
Receipts:
December sales	Answer
January sales	Answer	Answer
Total cash available		Answer
Disbursements:
Purchases	Answer
Direct labor	Answer
Variable manufacturing overhead	Answer
Fixed manufacturing overhead (exclude depreciation)	Answer
Variable selling and administrative	Answer
Fixed selling and administrative	Answer
Dividend	Answer	Answer
Ending Balance		Answer

(e) A budgeted contribution income statement for January.

Cubs Incorporated Budgeted Contribution Income Statement For the Month of January
Sales		Answer
Less variable costs:
Cost of goods sold	Answer
Selling and administrative	Answer	Answer
Contribution		Answer
Less fixed costs:
Manufacturing overhead	Answer
Selling and administrative	Answer	Answer
Net income