Question

Sales
Unit sales for November 2019		111,000
Unit sales for December 2019		101,000
Expected unit sales for January 2020		112,000
Expected unit sales for February 2020		112,000
Expected unit sales for March 2020		116,000
Expected unit sales for April 2020		125,000
Expected unit sales for May 2020		138,000
Unit selling price		$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 11,200 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 $102,595.

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		50¢		per labor hour
Maintenance		30¢		per labor hour
Salaries		$43,000		per month
Depreciation		$17,700		per month
Property taxes		$2,900		per month
Insurance		$1,200		per month
Maintenance		$1,300		per month

Selling and Administrative
Variable selling and administrative cost per unit is $1.50.
Advertising		$16,000	a month
Insurance		$1,500	a month
Salaries		$73,000	a month
Depreciation		$2,300	a month
Other fixed costs		$2,800	a month

Other Information

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For the first quarter of 2020, prepare a direct materials budget. (Round cost per pound to 2 decimal places, e.g. 0.25 and all other answers to 0 decimal places, e.g. 2,520.)

WATERWAYS CORPORATION Direct Materials Budget For the First Quarter of 2020March 2020For the Month Ending March 2020
		First Quarter
		January		February		March		Quarter
Direct Materials PurchasesUnits to be ProducedDirect Labor Cost Per HourTotal Required Direct Labor HoursDirect Labor Time Per UnitDirect Materials Per UnitTotal Direct Labor CostTotal Cost of Direct Materials PurchasesDesired Ending InventoryTotal Pounds Required for ProductionTotal Materials RequiredBeginning Materials InventoryCost Per Pound
Total Materials RequiredBeginning Materials InventoryDirect Labor Cost Per HourUnits to be ProducedTotal Cost of Direct Materials PurchasesTotal Direct Labor CostTotal Pounds Required for ProductionTotal Required Direct Labor HoursCost Per PoundDesired Ending InventoryDirect Labor Time Per UnitDirect Materials PurchasesDirect Materials Per Unit
Total Required Direct Labor HoursDirect Labor Cost Per HourDirect Labor Time Per UnitDirect Materials PurchasesBeginning Materials InventoryCost Per PoundDirect Materials Per UnitUnits to be ProducedTotal Direct Labor CostDesired Ending InventoryTotal Materials RequiredTotal Cost of Direct Materials PurchasesTotal Pounds Required for Production
AddLess: Units to be ProducedDirect Materials Per UnitDirect Labor Cost Per HourTotal Materials RequiredDirect Materials PurchasesTotal Cost of Direct Materials PurchasesBeginning Materials InventoryTotal Direct Labor CostTotal Pounds Required for ProductionTotal Required Direct Labor HoursCost Per PoundDirect Labor Time Per UnitDesired Ending Inventory
Total Required Direct Labor HoursUnits to be ProducedCost Per PoundTotal Pounds Required for ProductionDesired Ending InventoryDirect Labor Cost Per HourDirect Materials PurchasesDirect Labor Time Per UnitBeginning Materials InventoryDirect Materials Per UnitTotal Cost of Direct Materials PurchasesTotal Direct Labor CostTotal Materials Required
AddLess: Direct Materials Per UnitTotal Pounds Required for ProductionDirect Labor Time Per UnitTotal Cost of Direct Materials PurchasesCost Per PoundBeginning Materials InventoryDesired Ending InventoryTotal Materials RequiredDirect Labor Cost Per HourDirect Materials PurchasesTotal Direct Labor CostTotal Required Direct Labor HoursUnits to be Produced
Desired Ending InventoryTotal Direct Labor CostTotal Pounds Required for ProductionUnits to be ProducedDirect Materials PurchasesTotal Materials RequiredBeginning Materials InventoryCost Per PoundDirect Labor Cost Per HourTotal Cost of Direct Materials PurchasesDirect Labor Time Per UnitTotal Required Direct Labor HoursDirect Materials Per Unit
Desired Ending InventoryDirect Labor Cost Per HourCost Per PoundDirect Labor Time Per UnitTotal Pounds Required for ProductionDirect Materials PurchasesDirect Materials Per UnitTotal Cost of Direct Materials PurchasesTotal Required Direct Labor HoursUnits to be ProducedBeginning Materials InventoryTotal Direct Labor CostTotal Materials Required		$		$		$
Desired Ending InventoryDirect Labor Time Per UnitDirect Materials PurchasesTotal Cost of Direct Materials PurchasesDirect Materials Per UnitTotal Pounds Required for ProductionTotal Direct Labor CostTotal Materials RequiredTotal Required Direct Labor HoursUnits to be ProducedBeginning Materials InventoryCost Per PoundDirect Labor Cost Per Hour		$		$		$		$

Answer 1

Formulae used are: