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In: Accounting

Dalton Manufacturing is preparing its master budget for the first quarter of the upcoming year. The...

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

Requirement 1. 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

$24,030

$26,730

$24,840

$75,600

Credits sales

53,200

56,070

62,370

171,640

Total cash collections

$77,230

$82,800

$87,210

$247,240

Requirement 2. Prepare a production budget.​ (Hint: Unit sales​= Sales in dollars​ / Selling price per​ unit.)

Dalton Manufacturing

Production Budget

For the Quarter Ended March 31

Month

January

February

March

Quarter

Unit sales

8,900

9,900

9,200

28,000

Plus: Desired ending inventory

990

920

950

950

Total needed

9,890

10,820

10,150

28,950

Less: Beginning inventory

890

990

920

890

Units to produce

9,000

9,830

9,230

28,060

Requirement 3. Prepare a direct materials budget. ​(Round your answers to the nearest whole​ dollar.)

Dalton Manufacturing

Direct Materials Budget

For the Quarter Ended March 31

Month

January

February

March

Quarter

Units to be produced

9,000

9,830

9,230

28,060

Multiply by: Quantity (pounds) of DM needed per unit

2

2

2

2

Quantity (pounds) needed for production

18,000

19,660

18,460

56,120

Plus: Desired ending inventory of DM

3,932

3,692

3,764

3,764

Total quantity (pounds) needed

21,932

23,352

22,224

59,884

Less: Beginning inventory of DM

3,600

3,932

3,692

3,600

Quantity (pounds) to purchase

18,332

19,420

18,532

56,284

Multiply by: Cost per pound

$1.50

$1.50

$1.50

$1.50

Total cost of DM purchases

$27,498

$29,130

$27,798

$84,426

Requirement 4. Prepare a cash payments budget for the direct material purchases from Requirement 3.​ (Use the accounts payable balance at December 31 of prior year for the prior month payment in​ January.) ​(Round your answers to the nearest whole​ dollar.)

Dalton Manufacturing

Cash Payments for Direct Materials Budget

For the Quarter Ended March 31

Month

January

February

March

Quarter

20% of current month DM purchases

80% of last month's DM purchases

Total cash payments


Addititonal Data:

Actual sales in December were $76,000.
Selling price per unit is projected to remain stable at $9per 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 30​% cash and 70​% credit. All credit sales are collected in the month following the sale.

c.

Dalton Manufacturing has a policy that states that each​ month's ending inventory of finished goods should be 10​% of the following​month's sales​ (in units).

d.

Of each​ month's direct material​ purchases, 20​% are paid for in the month of​ purchase, while the remainder is paid for in the month following purchase.Two pounds of direct material is needed per unit at $ 1.50$1.50
per pound. Ending inventory of direct materials should be 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 30.03.The direct labor rate per hour is $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 $6,500
for factory​ rent, $2,900 for other fixed manufacturing​ expenses, and $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, Dalton Manufacturing will purchase equipment for $5,800
​(cash), while​ February's cash expenditure will be $11,600 and​March's cash expenditure will be $15,800.

h.

Operating expenses are budgeted to be $1.20 per unit sold plus fixed operating expenses of $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 $4,700 for the entire​quarter, which includes depreciation on new acquisitions.  

j.

Dalton Manufacturing has a policy that the ending cash balance in each month must be at least $4,400. It has a line of credit with a local bank. The company can borrow in increments of $1,000 at the beginning of each​ month, up to a total outstanding loan balance of $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 $1,000
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 $10,800 cash at the end of February in estimated taxes.

I only need help with requirement 4

Solutions

Expert Solution

Dalton Manufacturing
Cash Payments for Direct Materials Budget
For the Quarter Ended March 31
Month
January February March Quarter
20% of current month DM purchases $5,500 $5,826 $5,560 $16,885
80% of last month's DM purchases $43,000 $21,998 $23,304 $88,302
Total cash payments $48,500 $27,824 $28,864 $105,188


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