Waterways Corporation is prepaning its bucget for the coming yoar, 2017. The fir

Question

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

Explanation / Answer

SALES BUDGET Jan Feb March QUARTER Budgeted Sales units 113,000 112,500 116,000 341,500 Selling price per unit 12 12 12 12 Total Sales 1,356,000 1,350,000 1,392,000 4,098,000 PRODUCTION BUDGET Jan Feb March QUARTER April Budgeted Sales Units 113,000 112,500 116,000 341,500 125,000 Add: Desired Ending Finished inventory 11,250 11,600 12,500 12,500 Total Needs 124,250 124,100 128,500 354,000 Less: Beginning Finished Inventory 11,300 11,250 11,600 11,300 Required Production in units 112,950 112,850 116,900 342,700

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