Waterways Corporation is prepaning its bucget for the coming

Waterways Corporation is prepaning its bucget for the coming yoar, 2017. The first step is to plan for the tirst quarter ot that coming year Waterways gathered the following information from the managers 12,500 102,100 it sales for November 2016 Unit sales for December 2016 Expected unit sales for January 2017 113,000 Expected unit seles for February 2017 112,500 Expectod unit sales for March 201716,000 Expected unit seles for April 2017 125,000 Expectod unit sales for May 2017 Unit selling price 137,500 $12 im w tary. Al sales are on acco r. 85% of the Accounts Receivable are collected in the th or sale and 15% of the Aceo s Receivable are collected in ther a th aner sale. Accounts eceivable on December 31 2016, totaled Wate ays likes to keep 10% of the next month\'s unit sales in endi 183,780. Direct Haterials item Amount Used per Unit Inventory, Dec. 31 5,177.5 s 3,883.125 Es 1,294.37S ts lb 58c per Ib. Plasti 12 o 6t per oz Rubber peroz Metal, plastik, and rubber together are 75t per pound per unit onth n ts ending nventory. Pey ment r metersels \'5 made thin 15 d?¥5.5 %?pa in the month of puro ese 5nd %?pa n te onth a ter purchese. Acco ts Pooble on December 31, 2016, totaled $120 595 Ra Meter 15 on Water ys likes to keep 5 of the mete als needed for the next Cecember 31, 2016, totoled 11,295 pounds Labor requires 12 minutes per unit for completion and is paid at o rate of $8 per hour. indiret materials ndirect labor 3e per labor hour 50c per labor hour 5e per labor hour 25c per labor hour 42,000 per month $16,800 per month 2,67S per month $1.200 per month 1,300 per month Dcpreciation Property taxes Selling and Administrative riabe selling and administrative coat per unit S1.60. Advertising Seleries Dopreciation Other fixed costs $15,000 a month $1,400 a month $72,000e month $2,500 a month $3,000 a month The Cash balance an December 31, 2016, totaled $100 500, but mana e ent has decided it ould like to maintain a cash balance of at least?8 000 beginning on January 31, 2017 Dividends are paid each month at the ate of $2.50 pe hare fa 5 000 shares outstanding. The company has an open line of c edit ith Romney\'s Bank. The terrns af the a ree ent equires barro in to be in 1 000 ncrements at 8% interest. Water ays borrows on the first day of the me th à d epays on the Last day of the month. A 500 000 equipment purchase is plan id fr February

Solution

1)Sales Budget January February March Total Units to be sold 1,13,000 1,12,500 1,16,000 341500 * Selling price 12 12 12 12 1356000 1350000 1392000 4098000 2)Production Budget Units to be sold 113000 112500 116000 341500 Add clsoing stock 11250 11600 12500 35350 less opening stock -11300 -11250 -11600 -34150 Units to be produced 112950 112850 116900 342700 Direct material budget Metal QTY to be prodcued 112950 112850 116900 342700 * required for each unit 1 1 1 3 total material requried 112950 112850 116900 342700 add clsoing stock 5643 5845 6313 6313 less opening stock -5178 -5643 -5845 -5178 Direct material to be purchased 113415 113053 117368 343835 * purchase price 0.58 0.58 0.58 0.58 Purchase in $ 65781 65570 68073 199424 Plastic Qty to be prodcued 112950 112850 116900 342700 * required for each unit 12 12 12 12 total material requried 1355400 1354200 1402800 4112400 add clsoing stock 67710 70140 75750 75750 less opening stock -62128 -67710 -70140 -62128 Direct material to be purchased 1360982 1356630 1408410 4126022 * purchase price 0.06 0.06 0.06 0.06 Purchase in $ 81659 81398 84505 247561 Rubber QTY to be prodcued 112950 112850 116900 342700 * required for each unit 4 4 4 4 total material requried 451800 451400 467600 1370800 add clsoing stock 22570 23380 25250 25250 less opening stock -20704 -22570 -23380 -20704 Direct material to be purchased 453666 452210 469470 1375346 * purchase price 0.05 0.05 0.05 0.05 Purchase in $ 22683 22611 23474 68767 Total direct material purchases 170123 169579 176051 515753 Direct Labor Budget Units to be produced 112950 112850 116900 342700 * time required 0.2 hours 0.2 hours 0.2 hours 0.2 hours Total hours 22590 22570 23380 68540 * Rate 8 8 8 8 Total Direct labor cost 180720 180560 187040 548320