Lab #7 Template for Chapter 20 Master Budget for a Manufacturer Name: $22 Budget Assumptions 1. Projected January unit sales: 11,000 - Assumed month-over-month increase in unit sales: 5% - Selling price per unit: 2. Monthly sales will be 25% cash sales and 75% credit sales (collected in the month following the sales). 3. Ending finished goods inventory should equal 80% of the next month's expected unit sales. 4. Ending raw materials inventory should equal 50% of the next month's expected raw material needs. 5. The product's manufacturing cost is $12.65 per unit, including: - $7.35 per unit for materials (0.5 lbs. @ $14.70 per lb.) All purchases are on credit, and paid the following month. - $3.75 per unit for direct labor (0.25 hour @ $15 per hour rate) - $1.10 per unit for variable overhead - $0.45 per unit for fixed overhead (consisting entirely of $5,000 per month for depreciation expense) 6. Sales commissions are 10% of sales, and are paid in the month of the sales. 7. The sales manager's monthly salary is $4,000 in January, and $5,000 each month thereafter. B. Monthly general & administrative expenses include $12,000 in salaries and 0.8% monthly interest on a long-term $200,000 note (due next year). 9. Minimum monthly ending cash balance should be $50,000. If necessary, the company borrows enough cash to reach the minimum. Any borrowed short-term notes require a 1% interest payment at month-end (before any repayments/borrowings). If ending cash exceeds the minimum of $50,000, the excess is applied to repay any outstanding short-term note. There are currently no outstanding short-term notes 10. Dividends of $120,000 are declared and paid in February. 11. Equipment purchases of $75,000 are scheduled for March. Required - Prepare the following budget schedules: 2. Production Budget January February March 1st Quarter Projected Next Month's Unit Sales Targeted Ending Inventory % Desired Ending Inventory (units) Current Period's Unit Sales Estimated Units of Production Less: Beginning Inventory (units) Targeted Units to be produced 3. Direct Materials Budget January February March Targeted Units to Be Produced Materials Requirement per Unit (lbs) Materials Needed for Production (lbs) Add: Targeted Ending Inventory (lbs) Total Materials Required (lbs) Less: Beginning Inventory (lbs) Materials to Be Purchased (lbs) 2,100 2,425 Materials Price per Pound Estimated Cost of Direct Materials Purchases 4. Direct Labor Budget January February March Targeted Units to Be Produced Labor Requirement per Unit (hours) Total Labor Hours Needed Labor Rate per Hour Estimated Cost of Direct Labor