Master Budget Project $(100$ points$)$

Rally$$s Computers manufactures laptop computer stands which can be personalized after

mass$-$production. The company is completing its fifth year of operations and is preparing

its master budget for the coming year $(2024)$ based upon the following information:

a$.$ Fourth$-$quarter sales for $2023$ are $55,000$ units. Third quarter sales for $2023$ were

$50,000$ units.

b$.$ Unit sales by quarter are projected as follows:

First quarter $202460,000$

Second quarter $202470,000$

Third quarter $202465,000$

Fourth quarter $202490,000$

First quarter $202580,000$

Second quarter $202570,000$

Each unit sells for $$95.$ Rally$$s Computers estimates that $50\%$ of sales will be

collected in the quarter of sale. The company also estimates that $30\%$ will be

collected in the quarter following the sale and that $20\%$ of each quarter$$s sale will

be collected in the second quarter following the sale.

c$.$ Rally$$s tries to maintain at least $20\%$ of next quarter sales forecast in inventory.

d$.$ Each computer unit uses three hours of direct labor, two pieces of wood, and four

cement moldings. Laborers are paid $$12\mathrm{.}50$ per hour, one piece of wood costs $$8,$

and cement moldings are $$1\mathrm{.}75$ each.

e$.$ At the end of each quarter, Rally$$s plans to have $20$ percent of the wood needs

and $25$ percent of the molding needs for the next quarter$$s projected production

needs.

f$.$ Rally$$s buys wood and cement moldings on account. Half of the purchases are

paid for in the quarter of acquisition, and the remaining half are paid for in the

following quarter. Wages and salaries are paid on the last day of each month.

g$.$ Fixed overhead totals $$900,000$ each quarter. Of this total, $$200,000$ represents

depreciation. All other fixed expenses are paid for in cash in the quarter incurred.

h$.$ Variable overhead is budgeted at $$2$ per direct labor hour. All variable overhead

expenses are paid for in the quarter incurred.

i$.$ Fixed selling and administrative expenses total $$250,000$ per quarter, including

$$50,000$ depreciation.

j$.$ Variable selling and administrative expenses are budgeted at $$5$ per unit sold. All

selling and administrative expenses are paid for in the quarter incurred.

k$.$ Rally will pay quarterly dividends of $$150,000.$

l$.$ At the end of the third quarter, a $$100,000$ bond payment will be made.

m$.$ During the fourth quarter a $$330,000$ piece of equipment is purchased with cash.

n$.$ At the end of the fourth quarter, taxes of $$75,000$ are due.

o$.$ Rally$$s beginning cash balance is $$300,000.$ Rally must maintain a minimum

balance of $$250,000$ at quarter end. He borrows in multiples of $$5,000$ on the last

day of the quarter. Interest of $5\%$ is due quarterly and is paid on the last day of

the following quarter. Hint $$ interest rates are stated annually.