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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 months 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 Romneys 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.

(a) Your answer is partially correct. For the first quarter of 2020, prepare a sales budget. WATERWAYS CORPORATION Sales Budget For the Month Ending March 2020 First Quarter February January March a Expected Unit Sales 114000 112000 116000 Unit Selling Price $ 12 $ 12 $ 12 $ Total Sales $ 1,368,000 $ 1344000 $ 1,392.000 $ For the first quarter of 2020, prepare a production budget. WATERWAYS CORPORATION Production Budget For the First Quarter of 2020 First Quarter January February Expected Unit Sales 114.000 112,000 Add : Desired Ending Finished Goods Unit 11,200 11700 Total Required Units 125200 123700 Less y Beginning Finished Goods Unit -11,400 i -11,200 i Total Materials Required 113800 123700 - Your answer is partially correct. For the first quarter of 2020, prepare a direct labor budget. (Round time per unit to nearest hour, eg. 30 minutes will be rounded to 0.5 hours) WATERWAYS CORPORATION Direct Labor Budget For the First Quarter of 2020 First Quarter February January March Quarter $ Your answer is partially correct. For the first quarter of 2020, prepare a manufacturing overhead budget. (Round overhead rate to 2 decimal places, eg 5.25 and all other answers to O decimal places, eg. 2,520. List Variable Costs first) WATERWAYS CORPORATION Manufacturing Overhead Budget For the First Quarter of 2020 First Quarter January February Variable Costs March Quarter Indirect Materials $ $ $ Indirect Labor Utilities Maintenance Total Variable Cost $ $ > $ Fixed Costs Salarles Depreciation Property Taxes Insurance Maintenance Total Fixed Costs $ $ $ Predetermined overhead rate for the quarter $ $ $ $ Total Manufacturing Overhead $ 4.37 e Textbook and Media Solution For the first quarter of 2020, prepare a selling and administrative budget. (Enter per unit expenses rounded to 2 decimal places. Eg. 1.25) WATERWAYS CORPORATION Selling and Administrative Expense Budget For the First Quarter of 2020 First Quarter February January March Quarter Budget Sales In Units Variable Expenses Per Unit Variable Expenses Per Unit 4 $ $ Fixed Expenses . Advertising $ $ Insurance Salaries Depreciation Other Total Fixed Expenses $ Total S&A Expenses + $ e Textbook and Media * Your answer is incorrect For the first quarter of 2020. prepare a schedule for expected cash collections from customers. Schedule of Expected Collections from Customers February March January Quarter Accounts receivable, 12/31/19 $ January sales February sales March sales Total cash collections $ e Textbook and Media Solution For the first quarter of 2020, prepare a schedule for expected payments for materials purchases. (Round answers to decimal places, eg. 2,520.) Schedule of Expected Cash Payments for Purchases February March January Quarter Accounts payable, 12/31/19 $ $ January February March Total payments $ $

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