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Bettys Beautiful Baskets

Bettys Beautiful Baskets, a manufacturing business that sells baskets, wants a master budget prepared for the first three months of this year (January, February and March).

The managers of the different departments have provided the following information: The Sales Manager has projected the following sales:

o January: 5000 units o February: 4,000 units o March: 6,000 units o April: 5,000 units o May: 11,250 units o Projected selling price is $35.00/unit

Your Production Manager gave the following information: o Ending Inventory is to be 20% of next months production needs o Aprils Projected Sales 5,000 units o December 20X5 Ending Inventory was 1,000 units and December unit cost was $23.50.

The Manufacturing Manager has estimated the following: o Each unit will require 4 grams of material o Material in Ending Inventory is 20% of next months needs o Decembers Ending Material Inventory was 4,800 g o Projected cost of material: $2.50/gram

The Personnel Manager has estimated that Direct Labor will be projected at: o 0.75 hours of Direct Labor per unit

o Direct Labor Cost: $8.50/hour

The Facilities Manager has estimated that the Manufacturing Overhead will be projected at:

o Variable Overhead Rate to be $8 per Direct Labor hours o Fixed Overhead Rate to be $3,000 per month

The Accounting Department Manager has provided the following information:

Selling and Administrative Expenses are projected to be a monthly cost of:

o Salaries: $6000 o Rent: $1500 o Advertising: $1,100

o Telephone: $300

o Other:$500

Cash Receivable: o Decembers Sales were $150,000

o 80% of sales is collected in the month in which they were made o 20% of sales collected in the following month in which they were made o Bad Debts is negligible

Accounts Payable: o 80% of Payables is paid for in the current month o 20% of Payables is paid for in the following month o Decembers purchases were $50,000

Federal Income Tax is estimated at 22% average.

Bettys Beautiful Baskets

o has a $20,000 cash balance for the beginning of January o pays Dividends of $8,000 to be paid in March o pays projected Federal Income tax in March o depreciation on the building is $150 per month

o does not carry any WIP inventory

o uses FIFO inventory costing

From the beginning Balance Sheet: o Land = $150,000

o Building = $45,000 o Depreciation (Building) = $11,250 o Retained Earnings = $58,780 o Capital Stock = $200,470

Prepare the following:

Cash Budget

Betty's Beautiful Baskets Sales Budget First Quarter, 2018 Jan Feb March Quarter Budgeted Sales in Units Selling Price Projected Sales Revenue 5000 $35 $175,000 4000 S35 $140,000 6000 S35 $210,000 15000 S35 $525,000 Betty's Beautiful Baskets Expected Cash Collections First Quarter, 2018 Jan Feb March Quarter Accts Receivable: Beginning Bal: Jan Sales Feb Sales March Sales Total Cash Collections $ 30,000.00 $ 30,000.00 175,000.00 $28,000 140,000.00 168,000 168,000.00 170,000.00 $17,000.00 $ 196,000.00 513,000.00 $140,000 $35,000 $112,000

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