80.2K

Verified Solution

Link Copied!

Decker Manutacturing is preparing its master budget for the first quarter of the upcoming yoar. The following data pertain to Decker Manufacturing's operations: (Cick the icon to view the data.) B. (Click the icon to view additional data.) Read the pequirements. Requirement 1. Prepare in schedule of cash collections for January, February, and March, and for the quarter in total. ig data pertain to Decker a. Actual sales in December were $71,000. Selling price per unit is projected to remain stable at $12 per unit throughout the budget period. Sales for the first five months of the upcoming year are budgeted to be as follows: b. Sales are 35% cash and 65% credit. All credit sales are collected in the month following the sale. c. Decker Manufocturing has a policy that states that each month's ending inventory of finished goods should be 10% of the following month's sales (in units). d.Or each morith's direct material purchases, 20% are paid for in the month of purchase, while the remainder is paid for in the month following purchase. Three pounds of direct material is needed per unit at $2.00 per pound. Ending inventory of direct materials should be 20% of next month's production needs. e. Most of the labor at the manufacturing facily is indirect, but there is some direct labor incurred. The direct labor hours per unit is 0.05 . The direct labor rate per hour is $9 per hour. All direct labor is paid for in the month in which the work is performed. The direct labor total cost for each of the upcoming three months is as follows: 1. Monthly manufacturing overtead costs are $5,500 for tactory rent, $2,900 for other foced manufacturing expenses, and $1,10 per unit for variable manufacturing overhead. No depreciation is included in these figures. Alt expenses are paid in the month in which they are incurred. 9. Compuler equipment for the administrative offices will be purchased in the upcoming quarter. In January, Decker Manufacturing will purchase equipment for $5,000 (cash), while Fobruary's cash expenditure will be $12,200 and March's following monthis sales (in units). d. Of each month's direct material purchases, 20% are paid for in the month of purchase, while the remainder is paid for in the month following purchase. Three pounds of direct material is needed per unit at $2.00 per pound. Ending inventory of direct materials shovild be 20% of next month's production needs. e. Most of the labor at the manufacturing facility is indirect, but there is some direct labor incurred. The direct labor hours per unit is 0.05 . The direct labor rate per hour is $9 per hour. All direct labor is paid for in the month in which the work is performed. The direct labor total cost for each of the upcoming three months is as follows: 6. Monthly manufacturing overthead costs are $5,500 for factory rent, $2,900 for other fixed manufacturing expenses, and $1.10 per unit for variable manulacturing overhead. No depreciation is included in these figures. All expenses are paid in the month in which they are incurred. g. Computer equipment for the administrative offices wilt be purchased in the upcoming quarter. In January. Decker Manufacturing wil purchase equipment for $5,000 (cash), while February's cash expenditure will be $12,200 and March's cash expenditure will be $16,600. h.Operating expenses are budgeted to be $1.25 per unit sold plus fixed operating expenses of $1,800 per month. All operating expenses are paid in the month in which they are incurred. No deprociation is included in these figures. L. Depreciation on the building and oquipment for the general and administrative offices is budgeted to be $5,000 for the entire quarter, which includes depreciation on new acquisitions. 5. Decker Manufacturing has a policy that the ending cash balance in each month must be at least $4,000. It has a line of credit with a local bank. The company can borrow in increments of $1,000 at the beginning of each month, up to a fotal outstanding loan balance of $130,000. The interest rate on these loans is 1% per month simple interest (not compounded). The company would pay down on the line of credit balance in increments of $1,000 if it has excess funds at the end of the quarter, The compary would also pay the accumulated interest at the end of the quarter on the funds borrowed during the quarter. k. The company's income tax rate is projected to be 30% of operating income less interest expense. The company pays $10,000 cash at the end of Fobruary in estimated taxes

Answer & Explanation Solved by verified expert

See Answer