Waterways Corporation is preparing its budget for the coming year, 2022. The first step is to plan for the first quarter
Posted: Mon May 02, 2022 7:12 am
Waterways Corporation is preparing its budget for the coming
year, 2022. 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.
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, 2021, 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, 2021
totaled 11,220 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, 2021,
totaled $120,595.
Manufacturing Overhead
Indirect materials
Indirect labor
Utilities
Maintenance
Salaries
Depreciation
Property taxes
Insurance
Maintenance
Selling and Administrative
Variable selling and administrative cost per unit is $1.50.
Advertising
Insurance
Salaries
Depreciation
Other fixed costs
Other Information
The Cash balance on December 31, 2021, totaled $99,000, but
management has decided it would like to maintain a cash balance of
at least $700,000 beginning on January 31, 2022. Dividends are paid
each month at the rate of $2.50 per share for 5,040 shares
outstanding. The company has an open line of credit with Romney’s
Bank. The terms of the agreement requires borrowing to be in
$1,000increments at 9% interest. Waterways borrows on the first day
of the month and repays on the last day of the month. A $530,000
equipment purchase is planned for February.
(c) For the first quarter of 2022, prepare a direst materials
budget
(e) For the first quarter of 2022, prepare a manufacturing
overhead budget.
(g) for the first quarter of 2022, prepare a schedule for
expected cash collections from customers
(h) for the first quarter of 2022, prepare a schedule for
expected payments for materials purchase.
(i) For the first quarter of 2022, prepare a cash budget.
year, 2022. 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.
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, 2021, 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, 2021
totaled 11,220 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, 2021,
totaled $120,595.
Manufacturing Overhead
Indirect materials
Indirect labor
Utilities
Maintenance
Salaries
Depreciation
Property taxes
Insurance
Maintenance
Selling and Administrative
Variable selling and administrative cost per unit is $1.50.
Advertising
Insurance
Salaries
Depreciation
Other fixed costs
Other Information
The Cash balance on December 31, 2021, totaled $99,000, but
management has decided it would like to maintain a cash balance of
at least $700,000 beginning on January 31, 2022. Dividends are paid
each month at the rate of $2.50 per share for 5,040 shares
outstanding. The company has an open line of credit with Romney’s
Bank. The terms of the agreement requires borrowing to be in
$1,000increments at 9% interest. Waterways borrows on the first day
of the month and repays on the last day of the month. A $530,000
equipment purchase is planned for February.
(c) For the first quarter of 2022, prepare a direst materials
budget
(e) For the first quarter of 2022, prepare a manufacturing
overhead budget.
(g) for the first quarter of 2022, prepare a schedule for
expected cash collections from customers
(h) for the first quarter of 2022, prepare a schedule for
expected payments for materials purchase.
(i) For the first quarter of 2022, prepare a cash budget.