Question

LBL Corporation is preparing its master budget for the first quarter of the upcoming year. The following contains detail on LBL's operations necessary for their master budget: • Sales Information: o Actual / Projected Sales are as follows: : December (Prior Year; Actual): $75,000 January (Estimated): $85,000 February (Estimated): $91,000 March (Estimated): $96,000 . April (Estimated): $112,000 . May (Estimated): $120,000 o Units are sold at $11 each o Sales in a month are paid in cash for 40% and on credit for the remainder with credit collection occurring in the month following the sale. HINT: To help you with several budgets, you will need sales in UNITS (not total dollars as listed above). You can calculate the number of sales units by taking the total sales / sales price per unit. Partial balance sheet as of 12/31 of the prior year: o Cash $5,050 0 A/R, net $112,000 O Inventory $37,600 o PP&E $145,000 O A/P $35,700 o Capital Stock $140,900 o Retained Earnings $29,000 HINT: You may not need all this information. LBL plans to produce enough units for sales expected in the period as well as have a cushion in ending finished goods inventory of 20% of the following month's sales units expected. Direct Materials: Three pounds of materials are needed to create each unit. o When LBL purchases raw materials, they pay 30% in the month of purchase and the rest the following month. The cost is $1.50 per pound of material. o Management wants ending inventory to be equal to 20% of next month's production needs. HINT: Direct materials are the only thing that LBL pays for, in part, in the following month. All other expenses are paid for in the month they occur. Therefore, the balance for A/P is for raw materials.

Please complete the rest

Answer 1

Answer-

Master Budget

1.Summary of Cash Receipts from Customer
Description	Jan	Feb	Mar	Total
Sales in dollars	$          85,000	$       91,000	$       96,000	$       2,72,000
Sale Price P.u	11	11	11	11
Sales (in units)	7727	8273	8727	24727
(rounded off)
Sales Collected in same quarter (40%)	$          34,000	$       36,400	$       38,400	$       1,08,800
Collected in next quarter (60%)		$       51,000	$       54,600	$       1,05,600
Opening accounts receivable	$      1,12,000			$       1,12,000
Total Cash collection	$      1,46,000	$       87,400	$       93,000	$       3,26,400
2.Production budget for 1st Qtr
Description	Jan	Feb	Mar	Total
Expected sales (in units)	7,727	8,273	8,727	24,727
Add: Ending Inventory
(20% of following month sales)	1,655	1,745	2,036	5,436
Total units required	9,382	10,018	10,764	30,164
Less: Opening Inventory	1,545	1,655	1,745	4,945
Total production	7,836	8,363	9,019	25,218
3.Direct material budget
Description	Jan	Feb	Mar	Total
Total Production (in units)	7,836	8,363	9,019	25,218
Direct Material required p.u	3	3	3	3
Total direct material requirement (in lbs)	23,509	25,089	27,056	75,655
Add: Ending Inventory
(20% of next production needs)	1,673	1,804	2,066	5,542
Total direct material required	25,182	26,893	29,122	81,197
Less: Opening Inventory	1,567	1,673	1,804	5,044
Total material to be purchased	23,615	25,221	27,318	76,153
Cost per unit	$              1.50	$           1.50	$           1.50	$              1.50
Total Cost of Material purchased	$          35,422	$       37,831	$       40,977	$       1,14,230
4. Summary of Cash payment to suppliers
Description	Jan	Feb	Mar	Total
Total Cost of Material purchased	$          35,422	$       37,831	$       40,977	$       1,14,230
Cash paid (30% in same qtr)	$          10,627	$       11,349	$       12,293	$          34,269
Cash paid (70% in next qtr)		$       24,796	$       26,482	$          51,277
Opening payables	$          35,700			$          35,700
Total Cash disbursements	$          46,327	$       36,145	$       38,775	$       1,21,246