Question

Dalton Manufacturing is preparing its master budget for the first quarter of the upcoming year. The following data pertain to Dalton ​Manufacturing's operations:

Current Assets as of December 31 (prior year):

Cash. . . . . . . . . . . . . . . . . . . . . . . . . . .$4,460

Accounts receivable, net. . . . . . . . . . . $48,000

Inventory. . . . . . . . . . . . . . . . . . . . . . . .$15,000

Property, plant, and equipment, net. . . . . . . . . . . . . $121,000

Accounts payable. . . . . . . . . . . . . . . . . . . . . . .$43,000

Capital stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$127,000

Retained earnings. . . . . . . . . . . . . . . . . . . . . . .$22,500

Prepare a schedule of cash collections for​ January, February, and​ March, and for the quarter in total.

Dalton Manufacturing
Cash Collections Budget
For the Quarter Ended March 31
	Month

	January	February	March	Quarter
Cash sales
Credits sales
Total cash collections

Addititonal Data:

Actual sales in December were $ 76 comma 000$76,000. Selling price per unit is projected to remain stable at $ 9$9 per unit throughout the budget period. Sales for the first five months of the upcoming year are budgeted to be as​ follows: January. . . . . . . . $80,100 February. . . . . . . . . $89,100 March. . . . . . . . . $82,800 April. . . . . . . . . . $85,500 May. . . . . . . . . . . . . . $77,400
b.	Sales are 3030​% cash and 7070​% credit. All credit sales are collected in the month following the sale.
c.	DaltonDalton Manufacturing has a policy that states that each​ month's ending inventory of finished goods should be 1010​% of the following​ month's sales​ (in units).
d.	Of each​ month's direct material​ purchases, 2020​% are paid for in the month of​ purchase, while the remainder is paid for in the month following purchase. TwoTwo pounds of direct material is needed per unit at $ 1.50$1.50 per pound. Ending inventory of direct materials should be 20 %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 0.030.03. The direct labor rate per hour is $ 13$13 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: January. . . . . . . . $3,510 February. . . . . . . . . $3,834 March. . . . . . . . . $3,600
f.	Monthly manufacturing overhead costs are $ 6 comma 500$6,500 for factory​ rent, $ 2 comma 900$2,900 for other fixed manufacturing​ expenses, and $ 1.40$1.40 per unit for variable manufacturing 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 will be purchased in the upcoming quarter. In​ January, DaltonDalton Manufacturing will purchase equipment for $ 5 comma 800$5,800 ​(cash), while​ February's cash expenditure will be $ 11 comma 600$11,600 and​ March's cash expenditure will be $ 15 comma 800.$15,800.
h.	Operating expenses are budgeted to be $ 1.20$1.20 per unit sold plus fixed operating expenses of $ 1 comma 400$1,400 per month. All operating expenses are paid in the month in which they are incurred. No depreciation is included in these figures.
i.	Depreciation on the building and equipment for the general and administrative offices is budgeted to be $ 4 comma 700$4,700 for the entire​ quarter, which includes depreciation on new acquisitions.
j.	DaltonDalton Manufacturing has a policy that the ending cash balance in each month must be at least $ 4 comma 400$4,400. It has a line of credit with a local bank. The company can borrow in increments of $ 1 comma 000$1,000 at the beginning of each​ month, up to a total outstanding loan balance of $ 140 comma 000$140,000. The interest rate on these loans is 11​% per month simple interest​ (not compounded). The company would pay down on the line of credit balance in increments of $ 1 comma 000$1,000 if it has excess funds at the end of the quarter. The company 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 comma 800$10,800 cash at the end of February in estimated taxes.

Answer 1

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