Question

Waterways Corporation is preparing its budget for the coming year, 2020. The first step is to plan for the first quarter of that coming year. The company has gathered information from its managers in preparation of the budgeting process.

Sales
Unit sales for November 2019		114,000
Unit sales for December 2019		101,000
Expected unit sales for January 2020		114,000
Expected unit sales for February 2020		112,000
Expected unit sales for March 2020		117,000
Expected unit sales for April 2020		126,000
Expected unit sales for May 2020		138,000
Unit selling price		$12

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, 2019, totaled $181,800.

Direct Materials

Direct materials cost 80 cents per pound. Two pounds of direct materials are required to produce each unit.

Waterways likes to keep 5% of the materials needed for the next month in its ending inventory. Raw Materials on December 31, 2019, totaled 11,380 pounds. Payment for materials is made within 15 days. 50% is paid in the month of purchase, and 50% is paid in the month after purchase. Accounts Payable on December 31, 2019, totaled $102,875.

Direct Labor

Labor requires 12 minutes per unit for completion and is paid at a rate of $6 per hour.

Manufacturing Overhead
Indirect materials		30¢		per labor hour
Indirect labor		50¢		per labor hour
Utilities		40¢		per labor hour
Maintenance		20¢		per labor hour
Salaries		$41,000		per month
Depreciation		$15,800		per month
Property taxes		$3,000		per month
Insurance		$1,400		per month
Maintenance		$1,300		per month

Selling and Administrative
Variable selling and administrative cost per unit is $1.70.
Advertising		$13,000	a month
Insurance		$1,500	a month
Salaries		$70,000	a month
Depreciation		$2,600	a month
Other fixed costs		$2,700	a month

Other Information

The Cash balance on December 31, 2019, totaled $100,000, but management has decided it would like to maintain a cash balance of at least $800,000 beginning on January 31, 2020. Dividends are paid each month at the rate of $2.50 per share for 5,360 shares outstanding. The company has an open line of credit with Romney’s Bank. The terms of the agreement requires borrowing to be in $1,000 increments at 6% interest. Waterways borrows on the first day of the month and repays on the last day of the month. A $450,000 equipment purchase is planned for February.

I need Mainly:

Schedule of Expected Collections from Customers

Schedule of Expected Cash Payments for Purchases

Cash Budget

Answer 1

Complete and detail working about Cash budget - Step by Step analysis and derived number with workings Where ever mentioned as per Q ( mean as per Question)

Cash Budget	Jan'2020($)	Feb'2020($)	March'2020($)
Opening Bal	1,00,000	9,34,717	13,38,053
Cash collected Against Sales	13,44,600	13,47,600	13,95,000
( Workings 1)
Cash Payment
Purchase of Raw Material(working 2)	1,93,863	1,81,204	1,84,908
Direct Labour( Working 3)	1,36,800	1,34,400	1,40,400
Manufacturing OH( Working 4)	78,620	78,060	79,460
Selling Expenses( Working 5)	87,200	87,200	87,200
Dividend( As per Q- ($2.50 per share *5360 OS shares)	13,400	13,400	13,400
Equipment Purchase( as per Q)		4,50,000
Closing Cash Bal	9,34,717	13,38,053	22,27,685

	Actual			Projected
	Nov'19	Dec'19		Jan'2020($)	Feb'2020($)	March'2020($)	Total
Sales Unit	1,14,000	1,01,000		1,14,000	1,12,000	1,17,000	3,43,000
Selling price ( $/Unit)		12		12	12	12
Sale Value($)		12,12,000		13,68,000	13,44,000	14,04,000	41,16,000
Working 1
Opening Receivable Balance				1,81,800			1,81,800
( as per Q) - Receivable 85% collected				11,62,800	2,05,200		13,68,000
in same month and 25% in next month					11,42,400	2,01,600	13,44,000
after sale						11,93,400	11,93,400
Total Cash collection				13,44,600	13,47,600	13,95,000	40,87,200
Like Jan'20 - 85%*1368000=1162800
Feb - 15% of Jan Sales *1368000=205200
Balance 85%* Feb sales ( 1344000)

Working 2					Feb'2020	March'2020
Opening Accounts Payable				1,02,875
as per Q
50% is paid in the month of purchase, and 50% is paid in the month after purchase.	Jan'20	1,81,976		90,988	90,988
	Feb'20	1,80,432			90,216	90,216
	Mar'20	1,89,384				94,692
Total Raw Material Purchase($				1,93,863	1,81,204	1,84,908

Production Budget	Nov'19	Dec'19		Jan'2020	Feb'2020	March'2020	Total	April'2020	May'20
Budgted Number of Units		1,01,000		1,14,000	1,12,000	1,17,000	3,43,000	1,26,000	1,38,000
Add
Ending Inventory ( as per Q- 10%		11,400		11,200	11,700	12,600	35,500	13,800
of next months units Sale
Total Unit				1,25,200	1,23,700	1,29,600	3,78,500	1,39,800
Less Beginning
Inventory (Ending Inventory				(11,400)	(11,200)	(11,700)	(34,300)	(12,600)
of last month
Production Budget				1,13,800	1,12,500	1,17,900	3,44,200	1,27,200

Per Unit Usage				2	2	2
Total Material Required				2,27,600	2,25,000	2,35,800
Ending Inventory ( as per Q- 5%		11,380		11,250	11,790	12,720
needed for the next month in its ending inventory
Less Beginning				(11,380)	(11,250)	(11,790)
Inventory (Ending Inventory
of last month				2,27,470	2,25,540	2,36,730
Unit Purchase Of Raw Material
Unit Price ($/unit) as per Q				0.800	0.800	0.800
Purchase of Raw Material Cost($)				1,81,976	1,80,432	1,89,384

Labour cost-Working 3
Production Budget	Nov'19	Dec'19		Jan'2020	Feb'2020	March'2020
Budgeted Number of Units(as per Q)		1,01,000		1,14,000	1,12,000	1,17,000
Per unit Hr( 12/60)- as per Q				0.20	0.20	0.20
Total Hrs				22,800	22,400	23,400
Rate / Hr				6	6	6
Labour cost($)				1,36,800	1,34,400	1,40,400

Factory OHWorking 4				Jan'2020	Feb'2020	March'2020
Total Hrs(As above)				22,800	22,400	23,400
Indirect Material	0.3* DLH			6,840	6,720	7,020
Indirect Labour	0.5* DLH			11,400	11,200	11,700
Utilities	0.4* DLH			9,120	8,960	9,360
Maintainance	0.2* DLH			4,560	4,480	4,680
Total Variable Manufactitng oh($)(A)				31,920	31,360	32,760
Fixed cost
Salarie				41,000	41,000	41,000
Depreciation				15,800	15,800	15,800
Property tax				3,000	3,000	3,000
Insurance				1,400	1,400	1,400
Maintainance				1,300	1,300	1,300
Total FIxed OH($(B)				62,500	62,500	62,500
Total OH COST($)(c)				94,420	93,860	95,260

Depreciation) Non Cash				15,800	15,800	15,800
Cash Payment ($)				78,620	78,060	79,460

Total FIxed Cost($(B)				89,800	89,800	89,800
Depreciation) Non Cash				2,600	2,600	2,600
Cash Payment ($)				87,200	87,200	87,200

Variable cost - Jan '20 - 114000 * $ 1.70 = $193800. Feb - 112000 * $ 1.70=190400. March-117000 * $ 1.70=198900

Fixed cost as per Question - Advertisement, Insurance , Salary , Depreciation and other fixed cost-= Total amount $ 89900