Waterways Continuing Problem WCP21 Waterways Corporation is preparing its budget
ID: 2570814 • Letter: W
Question
Waterways Continuing Problem WCP21 Waterways Corporation is preparing its budget for the coming year, 2014. The first step is to plan for the first quarter of that coming year. Waterways gathered the following information from the managers Sales Unit sales for November 2013 Unit sales for December 2013 Expected unit sales for January 2014 Expected unit sales for February 2014 Expected unit sales for March 2014 Expected unit sales for April 2014 Expected unit sales for May 2014 Unit selling price 112,500 02.100 113,000 112.500 116,000 125,000 137,500 $12 waterways likes to keep 10% of the next month's unit sales in ending inventory. All sales are on account. 85% of the Accounts Receivable are collected in the month of sale, and 15% of the Accounts Receivable are collected in the month after sale. Accounts receivable on December 31, 2013, totaled $183,780 Item Metal Plastic Rubber Amount Used per Unit 1lb@58¢ per lb. 12 oz @ 6t per oz Inventory, Dec. 31 5,177.5 lbs 3,883.125 lbs 1294.375 lbs 10.355.0 lbs 2 lbs per unit Metal, plastic, and rubber together are 75¢ per pound per unit. Waterways likes to keep 5% of the materials needed for the next month in its ending inventory Payment for materials is made within 15 days, 50% is paid in the month of purchase, and 50% is paid in the month after purchase. Accounts Payable on December 31, 2013, totaled $120,595. Raw Materials on December 31, 2013, totaled 11,295 pounds. Direct Labor Labor requires 12 minutes per unit for completion and is paid at a rate of $8 per hour per labor hour 50% per labor hour 45p per labor hour 25¢ per labor hour 30 Indirect materials Indirect labor Utilities Maintenance Salaries $42,000 per month $16,800 per month $ 2,675 per month $ 1,200 per month $ 1,300 per month Property taxes Insurance Janitorial Selling and Administrative Variable selling and administrative cost per unit is $1.60. $15,000 a month $ 1,400 a month $72,000 a month $ 2,500 a month s 3,000 a month Advertising Salaries Depreciation Other fixed costs $3
Explanation / Answer
WATERWAYS CORPORATION Sales Budget For the First Quarter of 2014 First Quarter January February March Quarter Expected unit sales 113000 112500 116000 341500 Unit selling price $12 $12 $12 $12 Total sales $1,356,000 $1,350,000 $1,392,000 $4,098,000 WATERWAYS CORPORATION Production Budget For the First Quarter of 2014 First Quarter January February March Quarter Expected unit sales 113000 112500 116000 Add: Desired ending finished good units 11250 11600 12500 Total Required units 124250 124100 128500 Less: Beginning finished good units 11300 11250 11600 Required production units 112950 112850 116900 342700 WATERWAYS CORPORATION Direct Materials Budget For the First Quarter of 2014 First Quarter January February March Quarter Units to be produced 112950 112850 116900 342700 Direct Materials per unit 2 2 2 2 Total pounds needed for production 225900 225700 233800 685400 Add: Desired ending direct materials 11285 11690 12625 Total materials required 237185 237390 246425 Less: Beginning direct materials 11295 11285 11690 Direct Material Purchases 225890 226105 234735 686730 Cost per pound $0.75 $0.75 $0.75 $0.75 Total cost of raw materials purchases $169,417.50 $169,578.75 $176,051.25 $515,047.50 WATERWAYS CORPORATION Direct Labor Budget For the First Quarter of 2014 First Quarter January February March Quarter Units to be produced 112950 112850 116900 342700 Direct labor time 0.2 0.2 0.2 0.2 Total required direct labor hours 22590 22570 23380 68540 Direct labor cost per hour $8 $8 $8 $8 Total direct labor cost $180,720 $180,560 $187,040 $548,320 WATERWAYS CORPORATION Cash Budget For the First Quarter of 2014 First Quarter January February March Quarter Beginning Cash Balance $100,500 $800,097 $819,474 $100,500 Add: Receipts Collection from customers $1,336,380 $1,350,900 $1,385,700 $4,072,980 Total available cash $1,436,880 $2,150,997 $2,205,174 $4,173,480 Less: Disbursements Direct Materials $205,304 $169,499 $172,815 $547,618 Direct Labor $180,720 $180,560 $187,040 $548,320 Manufacturing Overhead $81,059 $81,031 $82,245 $244,335 Selling and administrative $272,200 $271,400 $277,000 $820,600 Equipment purchased $0 $500,000 $0 $500,000 Dividends $12,500 $12,500 $12,500 $37,500 Total disbursements $751,783 $1,214,990 $731,600 $2,698,373 Excess (deficiency) of available cash over cash disbursements $685,097 $936,007 $1,473,574 $1,475,107 Financing: Borrwings $115,000 $115,000 Repayments ($115,000) ($115,000) Interest ($1,533) ($1,533) Ending Cash balance $800,097 $819,474 $1,473,574 $1,473,574
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