Problem $13-66(Static)$ Comprehensive Budget Plan $(LO13-3,4,5)$

Lane Products manufactures a popular kitchen utensill. The company recently expanded, and the controller belleves that $it$ will need $to$

borrow cash $to$ continue operations. $It$ opened negotlations with the local bank for a one$-$month loan $of$ $$40,000$ starting March $1.$ The

bank would charge interest $at$ the rate $of0\mathrm{.}5$ percent per month and require the company $to$ repay interest and principal $on$ March $31.$

$In$ considering the loan, the bank requested a projected income statement and cash budget for March.

The following information $is$ avallable:

The company budgeted sales $at12,000$ units per month $in$ February, April, and May and $at9,000$ units $in$ March. The selling price

$is$ $$60$ per unit.

The company offers $a2$ percent discount for cash sales. The company's experience $is$ that bad debts average $1$ percent $of$ credit

sales.

The inventory $of$ finished goods $on$ February $1$ was $2,400$ units. The desired finished goods inventory $at$ the end $of$ each month

equals $25$ percent $of$ sales anticipated for the following month. There $isno$ work $in$ process.

The inventory $of$ raw materlals $on$ February $1$ was $2,280$ pounds. $At$ the end $of$ each month, the raw materlals inventory equals $no$

less than $20$ percent $of$ production requirements for the following month. The company purchases materials $in$ quantitles $of250$

pounds per shipment.

Selling expenses are $6$ percent $of$ gross sales. Administrative expenses, which include depreciation $of$ $$750$ per month $on$ office

furniture and fixtures, total $$68,400$ per month.

The manufacturing budget for the utensil, based $on$ normal production $of10,000$ units per month, follows.

Materials $(\%$ pound per utensil, $5,000$ pounds, $$30$ per pound$)$

Labor

Variable overhead

Fixed overhead $(includes$ depreciation $of$ $ $$20,090)$

Total

Required:

$a-1.$ Prepare schedules computing inventory budgets $by$ months for production $in$ units for February, March, and April.

$a-2.$ Prepare schedules computing inventory budgets $by$ months for raw materlals purchases $in$ pounds for February and March.

$b.$ Prepare a projected income statement for March. Cost $of$ goods sold should equal the varlable manufacturing cost per unit times

the number $of$ units sold plus the total fixed manufacturing cost budgeted for the period. Assume that $40$ percent $of$ sales are cash

sales.

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