Question

This is all one question. Thank you, I will give you a thumbs up if correct!

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 Unit sales for December 2019 Expected unit sales for January 2020 Expected unit sales for February 2020 Expected unit sales for March 2020 Expected unit sales for April 2020 Expected unit sales for May 2020 Unit selling price 112.000 101,000 112.000 114,000 114.000 126,000 138,000 $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 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 11,220 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, 2019, totaled $102,605. Direct Labor Labor requires 12 minutes per unit for completion and is paid at a rate of $9 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 $17,700 per month Property taxes $2,600 per month Insurance $1,300 per month Maintenance $1,300 per month Selling and Administrative Variable selling and administrative cost per unit is $1.60. Advertising $14.000 a month Insurance $1,500 a month Salaries $73.000 a month Depreciation $2,600 a month Other fixed costs $3,300 a month Other Information The Cash balance on December 31, 2019, totaled $98,000, but management has decided it would like to maintain a cash balance of at least $700,000 beginning on January 31, 2020. Dividends are paid each month at the rate of $2.60 per share for 4,980 shares outstanding. The company has an open line of credit with Romney's Bank. The terms of the agreement requires borrowing to be in $1,000 increments at 9% interest. Waterways borrows on the first day of the month and repays on the last day of the month. A $520,000 equipment purchase is planned for February

Answer 1

Please find attached all budgets along with final cash budget:

As ending cash balance per month is more than $ 700,000, no line of credit has been availed during the quarter.

Waterways Corporation Sales Budget for Quarter ending March 2020 Jan Feb Number of units 112000 114000 $ Price per unit | $ 12 $ 12 Total Sales (in $) (Units * Price per unit) $ 1,344,000 $ 1,368,000 $ $ Mar 114000 12 1,368,000 $ $ Quarter 340000 12 4,080,000 Quarter Mar 114000 Waterways Corporation Production Budget for Quarter ending March 2020 Jan Feb Sales in units 112000 114000 Add: Ending Inventory (10% of next month sales) 11400 11400 123400 125400 Less: Opening Inventory (ending inventory of previous month) 11220 11400 Units Produced 112180 114000 12600 126600 11400 115200 L 341380 Feb Mar Quarter 114000 Waterways Corporation Direct Materials Budget for Quarter ending March 2020 Jan Sales in units 112000 L 114000 Add:Ending Inventory (10% of next month sales) 11400 11400 123400 125400 Less: Opening Inventory (ending inventory of previous month) 11220 11400 Units produced 112180 114000 $ Price per unit ($ 0.80 per pound & 2 pounds required to produce 1 unit. So 2*0.8) $ 1.60 $ 1.60 Total Direct Material in $) $ 179,488 $ 182,400 12600 126600 11400 115200 $ $ 1.60 184,320 $ 546,208

Feb Mar 115200 19 60 Quarter 341380 quarters L Waterways Corporation Direct Labor Budget for Quarter ending March 2020 Jan Units Produced (from Production Budget) 112180 L 114000 Time spent per unit (12 minutes per unit; so 12/60 to arrive at total hrs spent) 0.2 0.2 Total Hrs Spent 22436 22800 Rate per hour 9 $ 9 Total Direct Labor (in $) (Total Hrs * Rate) $ 201,924 $ 205,200 0.2 23040 68276 $ $ 207,360 $ 614,484 Mar Quarter 0.4 0.2 0.2 Waterways Corporation Manufacturing OH for Quarter ending March 2020 Jan Feb Variabe: Indirect Material 0.3 Indirect Labor Utilities Maintenance 0.2 Total Variable OH per unit (in $) (total of all 4 items above) 1.40 $ 1.40 $ Total Labor hr (from Direct labor budget) 22436 22800 Total Variable OH (in $) (Hrs * Rate per unit) (rounded off to 0 decimal places) $ 31,410 $ 31,920 $ Fixed: Salaries 41,000 $ 41,000 $ Depreciation $ 17,700 $ 17,700 $ Property Taxes $ 2,600 $ 2,600 $ Insurance $ 1,300 $ 1,300 $ Maintenance $ 1,300 $ 1,300 $ Total Fixed OH (in $) (total of all 4 items above) $ 63,900 $ 63,900 $ Total Manufacturing OH (Variable + Fixed) $ 95,310 $ 95,820 $ 1.40 23040 32,256 $ 95,586 41,000 $ 17,700 $ 2,600 $ 1,300 $ 1,300 $ 123,000 53,100 7,800 3,900 3,900 63,900 96,156 $ $ 191,700 287,286

Mar Quarter $ 1.60 114000 115200 $ 184,320 $ 546,208 Waterways Corporation Selling and Administrative OH for Quarter ending March 2020 Jan Feb Variabe: Selling and Administrative OH $ 1.60 $ 1.60 Total units produced (from production budget) 112180 Total Variable OH (in $) (unit * Rate per unit) (rounded off to 0 decimal places) $ 179,488 $ 182,400 Fixed: Advertising 14,000 $ 14,000 Insurance 1,500 $ 1,500 Salaries 73,000 $ 73,000 Depreciation 2,600 $ 2,600 Other Fixed Cost 3,300 $ 3,300 Total Fixed OH (in $) (total of all 4 items above) $ 94,400 $ 94,400 Total Selling & Administrative OH (Variable+ Fixed) $ 273,888 $ 276,800 5 $ $ $ $ $ $ 14,000 $ 1,500 $ 73,000 $ 2,600 $ 3,300 $ 42,000 4,500 219,000 7,800 9,900 $ $ 94,400 $ 283,200 $ 278,720 $ 829,408 Mar Waterways Corporation Schedule of Expected Collection from Customer for Quarter ending March 2020 Jan Feb Accounts Receivable $ 181,800 January Sales (85% in Jan & 15% in Feb) $ 1,142,400 $ 201,600 February Sales (85% in Feb & 15% in Mar) $ 1,162,800 $ March Sales (85% in Mar & 15% in Apr) $ $ 1,324,200 $ 1,364,400 $ Quarter 181,800 1,344,000 1,368,000 1,162,800 4,056,600 $ $ $ $ $ 205,200 1,162,800 1,368,000 Mar Waterways Corporation Schedule of Expected Cash payment for purchases for Quarter ending March 2020 Jan Feb Accounts Payable $ 102,065 January Purchases (50% in Jan & 50% in $ 89,744 $ 89,744 February Purchases (50% in Feb & 50% in $ 91,200 $ March Purchases (50% in Mar & 50% in Apr) $ $ 191,809 $ 180,944 $ 91,200 92,160 183,360 $ $ $ $ $ Quarter 102,065 179,488 182,400 92,160 556,113

Waterways Corporation Cash Budget for Quarter ending March 2020 Jan Feb $ 98,000.00 $ 868,545.00 Mar $ 1,166,733.00 Quarter 98,000.00 $ Opening Cash Balance Add: Expected Cash collections From Receivable $ 1,324,200.00 | $ 1,422,200.00 $ 1,364,400.00 $ 2,232,945.00 $ 1,368,000.00 $ 2,534,733.00 $4,056,600.00 $ 4,154,600.00 $ $ 191,809.00 31,410.00 $ $ 180,944.00 31,920.00 $ $ 183,360.00 $ 556,113.00 32,256.00 $ 95,586.00 Less: Expected Cash disbursement For Purchases Variable Manufacturing OH Fixed Manufacring OH (Less Depreciation, as depreciation is not cash expense) Variable Selling & Admin OH Fixed Selling & Admin OH (Less Depreciation, as depreciation is not cash expense) Total Cash Disbursements $ $ 46,200.00 $ 179,488.00 $ 46,200.00 $ 182,400.00 $ 46,200.00 184,320.00 $ 138,600.00 $ 546,208.00 $ 91,800.00 $ 540,707.00 $ 881,493.00 $ 12,948.00 $ 91,800.00 $ 533,264.00 $1,699,681.00 $ 12,948.00 $ 91,800.00 $ 275,400.00 $ 537,936.00 $ 1,611,907.00 $ 1,996,797.00 $ 2,542,693.00 $ 12,948.00 $ 38,844.00 Less: Dividend Paid (4980*2.60) Capital Expenditure Less: Equipment Purchase $ 520,000.00 $ 1,166,733.00 $ 520,000.00 $ 1,983,849.00 $ 868,545.00 $ 1,983,849.00 Add: Line of borrowing to maintain minimum cash balance of $ 700,000 $ 868,545.00 $ 1,166,733.00 $ 1,983,849.00 $ 1,983,849.00

Answer 2

how compute $115000 financiing bowrow?