Prepare a production budget for Raikkonen Manufacturing, Inc. Budget should be for the indidual three months of the first quarter of 2016. Include a quartley total cloumn on the right side.

Facts: (attached is the sales budget)

RIKKNEN MANUFACTURING, INC.
BALANCE SHEET
DECEMBER 31, 2015
ASSETS
Cash					$30,853.00
Marketable Securities					20,000.00
Accounts Receivable					689,217.00
Interest Receivable					-
Inventories:
Raw Materials				$6,121.28
Work in Process				-
Finished Goods				97,163.67	103,284.95
Total Current Assets					843,354.95
Property, Plant and Equipment				801,990.00
Less: Accumulated Depreciation				(302,670.00)
Total Property, Plant and Equipment					499,320.00
Total Assets					$1,342,674.95
LIABILITIES AND STOCKHOLDERS EQUITY
Accounts Payable					$7,715.24
Interest Payable					-
Income Tax Payable					-
Short Term Borrowings					-
Total Current Liabilities					7,715.24
Long-Term Notes Payable					436,000.00
Total Liabilities					443,715.24
Common Stock ($5.00 Par)				$100,000.00
Paid in Capital in Excess of Par				475,000.00
Retained Earnings				323,959.71
Total Stockholders Equity					898,959.71
Total Liabilities and Stockholders Equity					$1,342,674.95

1. Sales
	2015 Actual Sales		2016 Estimated Sales
	Nov	Dec	Jan	Feb	Mar	Apr	May
Units	8,618	8,767	8,195	7,799	9,152	9,977	11,132
The selling price per unit has remained constant for the past year and is expected to
remain unchanged throughout the first quarter of 2016 at an amount of $64.99
2. Cash Collection Policy
Total sales consist of the following:
Cash sales:		10%
Credit sales:		90%
Credit collections are as follows:
In the month following the month of sale:					65%
In the second month following the month of sale:					35%
The Company does not have any bad debts.
3. Production Policy
The Company's policy is to produce during each month, enough units to meet the current
month's sales as well as a desired inventory at the end of the month which should be
equal to 22% of next month's estimated sales. On December 31, 2015, the finished
goods inventory consisted of 1,803 units at a cost of $53.89.
4. Raw Materials Purchasing Policy
Each month the Company purchases enough raw materials to meet that month's
production requirements and an amount equal to 20% of the next month's estimated
production requirements. Each unit of finished product requires 2.55 pounds of raw
materials at a cost of $1.48 per pound. On December 31, 2015, the raw materials
inventory consisted of 4,136 lbs. at a cost of $1.48.
Payments are made as follows:
In the month of purchase:				75%
In the following month the balance:				25%
The accounts payable balance of $7,715.24 as of December 31, 2015, represents 20% of
purchases made in December 2015 to be paid in January 2016.
5. Direct Labor Costs
Direct labor hours required per unit of finished product: 1.7
Average rate per direct labor hour:				$11.25
6. Manufacturing Overhead
The Company applies variable manufacturing overhead cost at the rate of 125% of direct
labor cost and fixed factory overhead on the basis of the number of direct labor hours.
The company has the following fixed overhead expenses per month:
	Factory supervisor's salary				$61,000.00
	Factory rent				7,500.00
	Factory insurance				5,500.00
	Depreciation of factory equipment				750.00
All manufacturing overhead costs, except depreciation, are paid for in cash during the
month in which they are incurred.
7. Selling and Administrative Expenses
Variable selling expenses are:
	Freight out		$0.75	per unit
	Sales commissions		2%	of sales dollars
Fixed selling and administrative expenses per month are:
	Salaries				$8,800.00
	Rent				2,000.00
	Advertising				175.00
	Insurance				265.00
	Depreciation (excluding depreciation of
	computer to be purchased at the end
	of January 2016				10,050.00
8. Income Taxes
Combined tax rate is 30% of Income before taxes computed at the end of the
quarter ending March 31, 2016 , payable in the second quarter.
9. Capital Expenditures
The Company expects to buy a new computer on January 31, 2016, for use in the sales and
administrative offices at a cost of $80,000.00, which will be paid in cash. Monthly
depreciation expense will be an additional $1,500.00 .
10. Financing Policy
On February 29, 2016, the Company is scheduled to pay $250,000.00 , of the long-term notes
payable plus interest expense for the first quarter at a rate of 12%
With respect to short-term borrowing, the Company's policy is to borrow at the beginning
of a month with an anticipated cash deficiency. A minimum cash balance of $25,000.00 is
required of the end of each month. The Company repays the principal of such short-term
borrowing at the end of the first following month to the extent of anticipated excess cash.
Interest must be paid at the beginning of the following month at a rate of 12%. Borrowing
and principal repayments are made in multiples of $1,000.00 .
11. Investing Policy
The Company invests any cash balance in excess of minimum requirements in marketable
securities at the beginning of any month where such surplus is anticipated. Investments
earn interest of the rate of 6% per annum which is credited to our account by the bank at
the beginning of the following month. You may assume that the balance of Marketable
Securities at December 31, 2015, was outstanding throughout the entire month.
12. General Information
Use proper rounding and show two (2) decimal places of accuracy on dollar amounts.
Round up and show whole amounts on all other figures.