Question

hii! i need help with requirements 6-8

PROBLEME 9,000 900 Objective The objective of Problem 3 is to reinforce your understanding of the preparation of budgets 16,800 Operating and Financial Budgets. Lynn has become concerned about the cash needs for th e cows. You have been asked to prepare some budgets related to the production and sales of water bottles for the first quarter of 2020: the three months of January February and March and the quartier in total Lyrwald like to begin the process with a production budget and a related purchases budgets for aluminum. Lynn purchased enough lids at a special price at the end of November that he will have no need to purchase additional ids through the first quarter of 2020. Finally, you are to produce a cash budget for each month and the quarter. The following sales-related information is provided: Budgeted 2020 Sales: Water bottles March 7,000 January 9.000 April Additional information for your budget preparation is as follows: a) Because of increased competition the average sales priceper water bottle in 2020 is expected to drop to $15.00 per bottle. b) Wonderful Water bottles has a policy that each month's ending inventory of finished goods (water bottles) should be 20% of the following month's sales in units. Ending inventory on December 31, 2019 followed this pattern c) Ending inventory of aluminum should be 40% of the next month's production needs in ounces. On average each water bottle will take 2 ounces of aluminum. The expected price for aluminum is $1.50 per ounce. Ending inventory on December 31, 2019 followed this pattern. Considering the April production schedule, the desired ending inventory of aluminum in March is 8,000 oz. d) Cash sales are 20% of total sales and are collected in the month of sale. The remaining sales are on account (credit) and are collected in the month following the month of sale. Accounts receivable on 12/31/19 is expected to be $140,000. e) Aluminum purchases are paid 30% in the month of purchase and 70% in the month following the month of purchase. Accounts Payable for purchases on 12/31/19 is expected to be $20,100. f) Budgeted labor costs for the plant for the three months of the first quarter are as follows: Budgeted 2020 Labor Costs January February $5.800 S5.400 $4,100 $4,100 Plant wages Plant salaries March $5.500 $4.100 These labor costs are paid 60% in in the month in which the work is performed and 40% in the following month. Amounts owed for salary and wages payable were expected to be 55,000 on 12/31/19. This amount will be paid in January B) In addition to the wages and salaries above, Lynn will pay his sales representative solely on a commission of 4% of sales, paid in the month incurred. Administrative salaries of $4,000 are also paid in cash each month. h) Utilities for the plant will be $21,000, 518,000, and $20,000 for January, February and March respectively. These amounts are paid in the month incurred. Other costs paid in the month incurred include indirect materials purchases of $1,800 per month. 1) Lynn plans to pay cash of $37,000 each month in the first quarter of 2020 for a series of advertisements in outdoor magazines. J) Lynn also plans to implement an ERP system for production scheduling in February of 2020. Installation of the system will cost $24,000, paid in February. The system will be depreciated over 5 years with no salvage value. A monthly fee for use of the system will be $2,000 to be paid each month beginning in February k) Depreciation on the plant and equipment will be $38.000 per month. Depreciation on administrative equipment is $1,000 per month.

Answer 1

1		Production budget
						Jan	Feb	Mar	April	Total
	Budgeted sales in units					9000	7000	8000	10000	24000
	Add: Desired ending inventory					1400	1600	2000		5000
	(20% of following months sales)					(7000*20%)	(8000*20%)	(10000*20%)
	Total units needed					10400	8600	10000		29000
	Less: Beginning inventory					1800	1400	1600		4800
	(Ending inventory of last month)					(9000*20%)
	Units to be produced					8600	7200	8400		24200
2		Direct materials budget
						Jan	Feb	Mar	Total
	Units to be produced				a	8600	7200	8400	24200
	Aluminium required per water bottle				b	2	2	2
	Aluminium required for the production				a*b	17200	14400	16800	48400
	Add: Desired ending inventory					5760	6720	8000	20480
	(40% of following months production needs)					(14400*40%)	(16800*40%)	(Given)
	Total aluminium required					22960	21120	24800	68880
	Less: Beginning inventory					6880	5760	6720	19360
	(Ending inventory of last month)					(17200*40%)
	Aluminium to be purchased in ounces				c	16080	15360	18080	49520
	Expected price per ounce				d	1.5	1.5	1.5
	Total purchase cost of Aluminium				c*d	24120	23040	27120	74280
3			Cash collections budget
						Jan	Feb	Mar	Total
	Budgeted sales in units				a	9000	7000	8000	24000
	Selling price per bottle				b	15	15	15
	Sales revenue				c=a*b	135000	105000	120000	360000
	Cash sales at 20%				d=c*20%	27000	21000	24000	72000
	80% collected in the next month				e	140000	108000	84000	332000
							(135000*80%)	(105000*80%)
	Total cash collections				d+e	167000	129000	108000	404000
4			Cash payment for direct materials budget
						Jan	Feb	Mar	Total
	Total purchase cost of Aluminium				a	24120	23040	27120	74280
	Payment:
	30% in the month of purchase				b=a*30%	7236	6912	8136	22284
	70% in the next month of purchase				c	20100	16884	16128	53112
							(24120*70%)	(23040*70%)
	Total payment				b+c	27336	23796	24264	75396
5			Cash payment for direct labor budget
						Jan	Feb	Mar	Total
	Plant wages				a	5800	5400	5500	16700
	Plant salaries				b	4100	4100	4100	12300
	Total				c=a+b	9900	9500	9600	29000
	Payment:
	60% in the current month				d=c*60%	5940	5700	5760	17400
	40% in the next month				e	5000	3960	3800	12760
							(9900*40%)	(9500*40%)
	Total payment				d+e	10940	9660	9560	30160