Rainy Day Company manufactures a unique umbrella. The company began operations April 1, 2020. Its accountant quit the second week of operations, and the company is searching for a replacement. The company has decided to test the knowledge and ability of all candidates interviewing for the position. Each candidate will be provided with the information below and then asked to prepare a series of reports, schedules, budgets, and recommendations based on that information. The information provided to each candidate is as follows.
Cost Items and Account Balances
Administrative salaries $11,250
Advertising 15,250
Cash, April 1 –0–
Depreciation on factory building 1,500
Depreciation on office equipment 800
Insurance on factory building 1,500
Miscellaneous expenses—factory 1,000
Office supplies expense 300
Professional fees 500
Property taxes on factory building 400
Raw materials used 70,000
Rent on production equipment 6,000
Research and development 10,000
Sales commissions 40,000
Utility costs—factory 900
Wages—factory 70,000
Work in process, April 1 –0–
Work in process, April 30 –0–
Raw materials inventory, April 1 –0–
Raw materials inventory, April 30 –0–
Raw material purchases 70,000
Finished goods inventory, April 1 –0–
Cash Flow Data
Cash collections from customers: 75% in month of sale and 25% the following month.
Cash payments to suppliers: 75% in month of purchase and 25% the following month.
Income tax rate: 45%.
Cost of proposed production equipment: $720,000.
Manufacturing overhead and selling and administrative costs are paid as incurred.
Desired ending cash balance: $30,000.
Question: Prepare the Direct Materials budget for the month of April 2020.
The answer has been presented in the supporting sheet. For detailed answer refer to the supporting sheet.
Rainy Day Company manufactures a unique umbrella. The company began operations April 1, 2020. Its accountant...
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