The managers of Gizmo Manufacturing Limited have gathered the following information

to assist you in preparing the master budget for the first quarter of

$2$

$0$

$2$

$4$

$.$

$1$

$.$

$$Budgeted sales for the next four months are as follows:

January

$5$

$0$

$,$

$0$

$0$

$0$

February

$6$

$0$

$,$

$0$

$0$

$0$

March

$4$

$5$

$,$

$0$

$0$

$0$

April

$4$

$0$

$,$

$0$

$0$

$0$

$$The selling price is $

$2$

$5$

$.$

$0$

$0$

$$per unit.

$$Sales are

$1$

$0$

$0$

$\%$

$$on credit and

$7$

$0$

$\%$

$$are collected in month of sale &

$3$

$0$

$\%$

$$in month following

$$the sale.

$2$

$.$

$$Accounts receivable are expected to be $

$4$

$1$

$7$

$,$

$8$

$7$

$0$

$$on December

$3$

$1$

$,$

$2$

$0$

$2$

$3$

$$& will be collected

$$In January

$2$

$0$

$2$

$4$

$.$

$3$

$.$

$$The company produces enough units each month to meet the months sales plus a desired

$$ending inventory equal to

$2$

$0$

$\%$

$$of the next month's estimated sales. The beginning inventory

$$at January

$1$

$,$

$2$

$0$

$2$

$4$

$$is expected to be

$1$

$0$

$,$

$0$

$0$

$0$

$$units$.$

$4$

$.$

$$Gizmo pays

$3$

$0$

$\%$

$$of direct materials in the month of purchase & pays the remaining

$7$

$0$

$\%$

$$in the

$$following month. Each unit of product requires

$5$

$$kg of direct materials at a cost of $

$1$

$.$

$5$

$0$

$$per kg

$.$

$$The company purchases enough direct materials each month for the current month's production

$$and

$1$

$0$

$\%$

$$of next month's production requirements. Beginning & ending inventory for the quarter

$$of direct materials are budgeted to be

$2$

$8$

$,$

$0$

$0$

$0$

$$for beginning &

$2$

$6$

$,$

$0$

$0$

$0$

$$for ending.

$5$

$.$

$$The Accounts payable balance is expected to be $

$1$

$4$

$6$

$,$

$2$

$0$

$0$

$$at December

$3$

$1$

$,$

$2$

$0$

$2$

$3$

$$& will be

$$paid in January.

$6$

$.$

$$The company plans to pays dividends of $

$1$

$5$

$,$

$0$

$0$

$0$

$$in January & March.

$7$

$.$

$$Gizmo Manufacturing Limited plans to purchase equipment costing $

$2$

$0$

$,$

$0$

$0$

$0$

$$in February

$8$

$.$

$$Each unit produced requires

$.$

$5$

$$hours of direct labour at a cost of $

$2$

$0$

$/$

hour

$.$

$9$

$.$

$$The company wishes to maintain a minimum cash balance of $

$2$

$5$

$,$

$0$

$0$

$0$

$$at the end of each month.

$1$

$0$

$.$

$$The company has an agreement with the local bank that allows them to borrow up to $

$7$

$0$

$,$

$0$

$0$

$0$

$.$

The interest rate on the loans is

$8$

$\%$

$$and there are no loans outstanding at December

$3$

$1$

$.$

$$All

borrowing is done at the start of the month and all repayments are made at the end of the month.

$1$

$1$

$.$

$$The cash balance at December

$3$

$1$

$,$

$2$

$0$

$2$

$3$

$$is budgeted to be $

$2$

$5$

$,$

$0$

$0$

$0$

$.$

Required:

$1$

$.$

$$Using the excel file included in the assignment complete the following budgets for the

first quarter of

$2$

$0$

$2$

$4$

$$for Gizmo Manufacturing Limited

$($

January

$,$

$$February & March

$)$

$.$

Sales Budget & Schedule of Expected Cash Collections

Production Budget

Direct Materials

$-$

$$Purchases & Cash Disbursements Budget

Direct Labour Budget

Cash Budget

$2$

$.$

$$What will the accounts receivable & accounts payable balances be at March

$3$

$1$

$,$

$2$

$0$

$2$

$4$

$?$