Waterways Continuing Problem 21 (Part Level Submission) Waterways Corporation is

Question

Waterways Continuing Problem 21 (Part Level Submission) Waterways Corporation is preparing its budget for the coming year, 2017. The first step is to plan for the first quarter of that coming year. Waterways gathered the following information from the managers 112,500 102,100 113,000 112,500 116,000 125,000 137,500 Unit sales for November 2016 Unit sales for December 2016 Expected unit sales for January 2017 Expected unit sales for February 2017 Expected unit sales for March 2017 Expected unit sales for April 2017 Expected unit sales for May 2017 Unit selling price 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, 2016, totaled $183,780. Direct Materials Amount Used perInventory, Dec. 31 lib @ 58¢ per lb. 12 oz 6c per oz 4oz @ S¢ per oz 2 lbs per unit 5,177.5 bs 3,883.125 lbs ,294.37S ibs 10,355.0 ibs Metal, plastic, and rubber together are 75¢ per pound per unit.

Explanation / Answer

Sales Budget Jan Feb Mar Qtr Expected unit sales 113000 112500 116000 341500 Unit Selling Price 12 12 12 12 Total Sales 1356000 1350000 1392000 4098000 Production Budget Jan Feb Mar Qtr Expected unit sales 113000 112500 116000 341500 Add desired ending finished goods 11250 11600 12500 12500 Total required units 124250 124100 128500 354000 Less beginning finished goods units 11300 11250 11600 11300 Required production units 112950 112850 116900 342700 Direct Material Budget Jan Feb Mar Qtr Units to be produced 112950 112850 116900 342700 Direct Material per unit 2 2 2 2 Total pound needed for production 225900 225700 233800 685400 Add desired ending material (lbs) 11285 11690 12625 12625 Total Material required 237185 237390 246425 698025 Less beginning direct material(lbs) 11295 11285 11690 11295 Direct material purchase 225890 226105 234735 686730 cost per pound 0.75 0.75 0.75 0.75 Total cost direct material purchase 169418 169579 176051 515048 Schedule of expected collection from customers Jan Feb Mar Accounts Receivable 183780 January Sales 1152600 203400 0 Feb Sales 0 1147500 202500 Mar Sales 0 0 1183200 Total Cash Collection 1336380 1350900 1385700 Schedule of expected cash payment for purchases Jan Feb Mar Qtr Accounts Payable 120595 120595 Jan 84709 84709 0 169418 Feb 0 84789 84789 169579 Mar 0 0 88026 88026 Total Payments 205304 169498 172815 547617 Cash Budget Jan Feb Mar Qtr Beginning Cash balance 100500 800797 800610 100500 Add Receipts Collection from customers 1336380 1350900 1385700 4072980 Total available cash 1436880 2151697 2186310 5774887 Less Disbursements Direct Material 205304 169498 172815 547617 Direct Labor 180720 180560 187040 548320 Equipment purchase 0 500000 0 500000 Selling and Administrative 274700 273900 279500 828100 Dividends 12500 12500 12500 37500 Manufacturing overheads 97859 97829 99045 294733 Total disbursements 771083 1234287 750900 2756270 Excess/(deficiency) 665797 917410 1435410 3018618 Financing Add Borrowings 135000 0 0 135000 Less 0 Repayments 0 115000 20000 135000 Interest 0 1800 133 1933 Ending cash balance 800797 800610 1415277 1415277

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