Hansell Company's management wants to prepare budgets for one of its products, Duraflex, for July 2019. The firm sells the product for $84 per unit and has the following expected sales (in units) for these months in 2019: April 4,600 May 5,800 June 5,900 July 6,800 August 7,800 September 7,200 The production process requires 4 pounds of Dura-1000 and 2 pounds of Flexplas. The firm's policy is to maintain an ending inventory each month equal to 10% of the following month's budgeted sales, but in no case less than 500 units. All materials inventories are to be maintained at 5% of the production needs for the next month, but not to exceed 1,000 pounds. The firm expects all inventories at the end of June to be within the guidelines. The purchases department expects the materials to cost $1.25 per pound and $5.00 per pound for Dura-1000 and Flexplas, respectively. The production process requires direct labor at two skill levels. The rate for labor at the K102 level is $50 per hour and $20 per hour for the K175 level. The K102 level can process one batch of duraflex per hour; each batch consists of 100 units. The manufacturing of Duraflex also requires one-tenth of an hour of K175 workers' time for each unit manufactured. Hansell Company expects its trial balance on June 30 to be as follows: Cash Accounts receivable HANSELL COMPANY Budgeted Trial Balance June 30, 2019 Debit Credit $ 44,000 88,000 3,900 28,000 728,000 358,400 106,400 Allowance for bad debts Inventory Plant, property, and equipment Accumulated depreciation Accounts payable Wages and salaries payable Note payable Stockholders' equity. Total $ BBB,000 27,000 225,000 167,300 $ 888,000 mi My Courses WileyPLUS My Courses Connect - Class:... Saved NEWCONRect.mheducation.com/52F#/activi... problem hmwk 4 a... G yhjcdkeu - Google... Help Save & Exit Sub Typically, cash sales for Hansell represent 20% of sales while credit sales represent 80%. Credit sales terms by the company are 2/10, n/30. Hansell bills customers on the first day of the month following the month of sale. Experience has shown that 60% of the company's billings will be collected within the discount period, 25% by the end of the month after sales, 10% by the end of the second month after the sale, and 5% will ultimately be uncollectible. The company writes off uncollectible accounts after 12 months. The purchase terms for materials are 2/15, n/60. Hansell makes all payments within the discount period. Experience has shown that 80% of the purchases are paid in the month of the purchase and the remainder are paid in the month immediately following. In June 2019, the firm budgeted purchases of $27,600 for Dura-1000 and $24,200 for Flexplas. Variable manufacturing overhead is budgeted at $1,300 per batch (of 100 units) plus $80 per direct labor hour. In addition to variable overhead, the firm has a monthly fixed factory overhead of $55,200, of which $25,200 is depreciation expense. The firm pays all manufacturing labor and factory overhead when incurred. Total budgeted marketing, distribution, customer service, and administrative costs for 2019 are $2,697,000. Of this amount, $1,350,000 is considered fixed and includes depreciation expense of $135,000. The remainder varies with sales. The budgeted total sales for 2019 are $4 million. All marketing and administrative costs are paid in the month incurred. Management desires to maintain an end-of-month minimum cash balance of $44,000. The firm has an agreement with a local bank to borrow its short-term needs in multiples of $1,000 up to $100,000 at an annual interest rate of 12%. Borrowings are assumed to occur at the end of the month. Bank borrowing at July 1 is $0. Required: Using the information presented above: 1. Prepare the cash budget for July 2019. 2. Prepare the budgeted income statement for July 2019. (Assume that the company uses a LIFO cost-flow assumption.) Complete this question by entering your answers in the tabs below. F1 Required 1 Required 2 @ 2 F3 F2 #3 54 $ 888 F4 < Prev 3 of 3 Next > F5 MacBook Air F6 % & 5 6 7 F7 2 W E R T Y U N S 8 *CO F8 9 Check my work F10 F11 O P D F G H J K 7 X C V B N M ge H command ces Prepare the cash budget for July 2019. (Round your answers to the nearest whole dollar amount.) HANSELL COMPANY Cash Budget For July 2019 Cash balance, beginning (given) Mc Graw Hill Cash flow from operations: July cash sales Collections of receivables from credit sales in June: Collections of receivables from credit sales in June-Within the discount period Collections of receivables from credit sales in June-After the discount period Collections of receivables from credit sales in May Cash disbursements: Materials purchases - Jun Materials purchases - July Direct manufacturing labor Variable factory overhead Fixed factory overhead Variable marketing, customer services, and administrative expenses Fixed marketing, customer services, and administrative expenses Q A F1 Total cash flow from operations Investing activities: Z 2 F2 #3 F3 888 $ 4 F4 % $ 114,240 38,976 69 $ SA $ 44,000 153,216 10,153 17,250 150,420 30,000 101,250 $ (155,857) < Prev 3 of 3 Next > MacBook Air F5 F6 5 6 F7 F8 F9 F10 & 7 8 9 W E R T Y U S X H D F G H J K V B N M P L L g ces Variable factory overhead Fixed factory overhead Variable marketing, customer services, and administrative expenses Fixed marketing, customer services, and administrative expenses Total cash flow from operations Investing activities: Mc Graw Hill Education Financing activities: New borrowing, end of month ! 7 Cash balance, July 31, 2019 Q A 2 % 20 F2 #3 Required 1 Required 2 > F3 $ 44 888 F4 % 150,420 30,000 101,250 $ (155,857) $ 0 69 $ 0 $ (111,857) < Prev 3 of 3 Next F5 MacBook Air 5 6 F6 & 88 7 F7 W E R T Y U S 8 * 00 F8 9 F9 D F G H J K O Z X C V B N M H F10 L P H Prepare the budgeted income statement for July 2019. (Assume that the company uses a LIFO cost-flow assumption.) (Round "per unit" to 2 decimal places and other answers to the nearest whole dollar amount.) HANSELL COMPANY Budgeted Income Statement For July 2019 Sales k Cost of goods sold nces Gross margin + Selling and administrative expenses Variable Selling and administrative expenses - Fixed Operating income before tax Direct materials - Dura-1000 Direct materials - Flexplas Direct labor-K102 labor Direct labor K175 labor Factory overhead-Batch-related Factory overhead Direct-labor hour-related Factory overhead - Fixed Mc Graw Hill Education 7 Cost per unit, July F1 02 F2 # 3 69 $ 69 < Required 1 F3 888 $ 54 F4 571,200 321,640 249,560 112,500 137,060 69 $ 69 0.00 Required 2 < Prev 3 of 3 Next % 005 MacBook Air F5 F6 & 27 Q W E R T Y A Z S F7 8 * F8 9 D F G H J K H nd V B N M F10 P L H