Problem $13-66($Algo$)$ Comprehenslve Budget Plan $($LO $13-3,4,5)$

Lone Products monufoctures a popular latchen utenal. The compony recently exponded, ond the controller believes that it will need to

borrow cash to continue operations. It opened negatations with the local bank for a one$-$month loon of $$46,000$ starting March $1.$ The

bonk would charge interest at the rate of $0\mathrm{.}5$ percent per month and requlre the compeny to repoy linterest and princlpol on March $31.$

In considering the losn, the bank requested s projected income statement and cash budget for March.

The follawing informstion is svallable:

The company budgeted sales at $15,000$ unlts per month In February, April, and Moy and st $12,000$ units In Msrch$.$ The seling price

ls $$63$ per unit.

The compony offers a $2$ percent discount for cssh ssles. The compony's experience ls that bod debts averoge $1$ percent of credit

soles.

The Inventory of finlshed goods on Februsry $1$ was $2,700$ units. The desired finlshed goods inventory st the end of esch month

equals $25$ percent of sales anticlpated for the following month. There is no work in process.

The Inventary of row materials on Februsry $1$ was $2,430$ pounds. At the end of each month, the row materlals inventory equals no

less than $20$ percent of production requirements for the following month. The compony purchases materisis in quantites of $265$

pounds per shipment.

Seling expenses sre $6$ percent of gross soles. Adminlatrotive expenses, which include depreclation of $$900$ per month on office

furniture and foctures, total $$70,200$ per month.

The manufscturing budget for the utensil, bseed on normal production of $14,000$ units per month, follows.

Naterials $(x$ pound por utensil, $7,$ eea pounds, $$36$ por pound$)$

Labor:

variable overtead

Flived owertwad $($includos deprociation of $$26,a6a)$

Total

Required:

a$-1.$ Prepore schedules computing Irmentory budgets by months for production in units for Februsry, March, snd April.

a$-2.$ Prepare schedules computing Inventory budgets by months for row materials purchases In pounds for Februsry and March.

b$.$ Prepsre s projected Income ststement for March. Cost of goods sold should equsl the varlsble manufacturing coat per unit times:

the number of unts sold plus the total fived manufacturing cost budgeted for the period. Assume that $40$ percent of sales sore cash

soles.

Complete this question by entering your answers in the tabs below.

Prepare schedules computing inventory budqets by manths for raw materials purchases in pounds for Febnory and March.