Benzie Corp. is a small manufacturing company that makes specialized packaging for horticultural products that protects plants during shipping. They are preparing their master budget for the first quarter of the upcoming year. The following data are selected items from the accounting records of its operations:
| As of December 31 (prior year) |
| Cash |
$15,500 |
| Accounts receivable, net |
$46,800 |
| Inventory |
$15,000 |
| Property, plant, and equipment, net |
$120,000 |
| Accounts payable (for raw materials) |
$9,360 |
a. Actual sales in December were $72,000. Selling price per unit is projected to remain stable at $12 per unit throughout the budget period. Sales for the first five months of the upcoming year are budgeted to be as follows:
| January |
$99,000 |
| February |
$111,000 |
| March |
$110,000 |
| April |
$107,000 |
| May |
$103,000 |
b. Sales are 35% cash and 65% credit. All credit sales are collected in the month following the sale.
c. Benzie has a policy that states that each month's ending inventory of finished goods should be 10% of the following month's sales (in units).
d. Of each month's direct materials purchases, 20% are paid for in the month of purchase, while the remainder is paid for in the month following purchase. Three pounds of direct material is needed per unit at $2.00 per pound. Ending inventory of direct materials should be 20% of next month's production needs.
e. All direct labor is paid for in the month in which the work is performed. The direct labor total cost for each of the upcoming three months is as follows:
| January |
$3,807 |
| February |
$4,442 |
| March |
$4,293 |
f. Monthly manufacturing overhead costs are $5,500 for factory rent, $2,900 for other fixed manufacturing expenses, and $1.10 per unit for variable manufacturing overhead. All expenses are paid in the month in which they are incurred.
g. Computer equipment for the administrative offices will be purchased in the upcoming quarter. In January, the company will purchase equipment for $5,000 cash, while February's cash expenses for equipment will be $12,200 and March's cash expenses for equipment will be $16,600.
h. Operating expenses are budgeted to be $1.25 per unit sold plus fixed operating expenses of $1,800 per month. All operating expenses are paid in the month in which they are incurred.
Required:
1. What is the budgeted total cash collections for the 1st quarter?
2. What is the budgeted production for the quarter in term of number of units? (Recommended: Convert total sales to unit sales for each month)
3. What is the budgeted total cost of direct material for the quarter?
4. What is the budgeted total cash payments for the direct material purchases for the quarter from Requirement 3? Note: Use the December 31 balance in accounts payable as the amount of December direct materials purchases that are paid for in January.
5. What is the ending cash balance for the quarter?