Question

Waterways Continuing Problem (This is a continuation of the Waterways Problem from Chapters 1 through 8.) WCP9 Waterways Corporation is preparing its budget for the coming year, 2014. The first step is to plan for the first quarter of that coming year. Waterways gathered the fol- lowing information from the managers. Sales 112.500 102.100 113,000 Unit sales for November 2013 Unit sales for December 2013 Expected unit sales for January 2014 Expected unit sales for February 2014 Expected unit sales for March 2014 Expected unit sales for April 2014 Expected unit sales for May 2014 Unit selling price 112.500 116.000 125,000 137,500 $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 receiv- able on December 31, 2013, totaled $183,780. Direct Materials Amount Used per Unit Inventory, Dec. 31 Item 5,177.5 Ibs 3,883.125 lbs 1.294.375 lbs Metal Plastic Rubber 1 lb@ 58e per Ib. 12 oze 6e per oz 4 ez@ 5e per oz 10.355.0 lbs 2 lbs per unit Metal, plastic, and rubber together are 75e per pound per unit. Waterways likes to keep 5%e of the materials needed for the next month in its ending inventory. 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, 2013, totaled $120,595. Raw Materials on December 31, 2013. totaled 11.295 pounds. Direct Labor Labor requires 12 minutes per unit for completion and is paid at a rate of $8 per hour Manufacturing Overhead Indirect materials Indirect labor Utilities Maintenance Salaries Depreciation Property taxes Insurance 30e per labor hour 50e per labor hour 45e per labor hour 25e per labor hour $42,000 per month $16,800 per month $ 2,675 per month $ 1,200 per month $ 1,300 per month Janitorial Selling and Administrative Variable selling and administrative cost per unit is $1.60. Advertising Insurance Salaries Depreciation Other fixed costs $15,000 a month $ 1,400 a month $72,000 a month $ 2.500 a month $ 3,000 a month

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Waterway Corp Sales Budget For the First Qtr of 20xx January February March T otal Qtr 113,000 112,500 116,000 341,500 Month Expected Sales Total Qtr 341,500 Waterway Corp Production Budget For the First Qtr of 20xx Month January February March Current Month Sales 113,000 112,500 116,000 Closing Balance (10% of next month sales) 11,250 11,600 12,500 Total Required Units 124,250 124,100 128,500 Less: Opening Balance (10% of| Current Month sales) 11,300 11,250 11,600 Production Requirement 112,950 112,850 116,900 April sales - 125,000 10% of 125,000 = 12,500 Total 113,000 112,500 116,000 341,500 35,350 376,850 34,150 342,700 Waterway Corp Direct Labour Budget For the First Qtr of 20xx Month January February March Total Qtr Production Requirement-A 112,950 112,850 116,900 342,700 Minutes - B 12 12 12 Hours Required - C=A*(B/60) 22,590 22,570 | 23,380 68,540 Rate Per Hour-D 8 18 8 April sales - 125,000 10% of 125,000 = 12,500 12 =125000*5% = 6250 Total Direct Labour Cost - E=C+D | 180,720 180,560 187,040 548,320 =125000*(12/16)*5 % = 4688 Waterway Corp Direct Material Budget For the First Qtr of 20xx Month January February March Total Qtr Production Requirement- A 1 12,950 112,850 116,900 342,700 Material (A*1) 112,950 112,850 116,900 342,700 Closing Inventory (5% of Next Month Production) 5,643 5,8456,250 17,738 Less: Opening Inventory 5,178 5,643 5 ,845 16,665 Requirement of Material 113,415 113,053 117,305 343,773 Plastic [A*(12/16] 1 84,713 84,638 87,675 257,025 Closing Inventory (5% of Next Month Production) 4,232 4,384 4,688 13,303 Less: Opening Inventory 3,883 4,232 4,384 12,499 Requirement of Material 85,061 84,789 87,979 257,829 Rubber [A*(4/16] 28,238 28,213 29,225 85,675 Closing Inventory (5% of Next Month Production) 1,4111,461 1,5634,434 Less: Opening Inventory 1,294 1,411 1,461 4,166 Requirement of Material 28,354 28,263 29,326 85,943 =125000*(4/16)*5% = 1563