Question

Storm Tools has formed a new business unit to produce battery-powered drills. The business unit was formed by the transfer of selected assets and obligations from the parent company. The unit's initial balance sheet on January 1 contained cash ($500,000), plant and equipment ($2,500,000), notes payable to the parent ($1,000,000), and Common Stock ($2,000,000). The business unit is expected to repay the note at $50,000 per month, plus all accrued interest at 1/2% per month. Payments are made on the last day of each month. The unit is scheduled to produce 25,000 drills during January, with an increase of 2,500 units per month for the next three months. Each drill requires $40 of raw materials. Raw materials are purchased on account, and paid in the month following the month of purchase. The plant manager has established a goal to end each month with raw materials on hand, sufficient to meet 25% of the following month's planned production. The unit expects to sell 20,000 drills in January; 25,000 in February, 25,000 in March, and 30,000 per month thereafter. The selling price is $100 per drill. Half of the drills will be sold for cash through a website. The others will be sold to retailers on account, who pay 40% in the month of purchase, and 60% in the following month. Uncollectible accounts are not material. Each drill requires 20 minutes of direct labor to assemble. Labor rates are $24 per hour. Variable factory overhead is applied at $9 per direct labor hour. The fixed factory overhead is $25,000 per month; 60% of this amount is related to depreciation of plant and equipment. With the exception of depreciation, all overhead is funded as incurred. Selling, general, and administrative costs are funded in cash as incurred, and consist of fixed components (salaries, $100,000; office, $40,000; and advertising, $75,000) and variable components (15% of sales).

Prepare the master budget for the quarter ended March 31, 2018.

Can an expert help prepare the master budget with the template below

STORM TOOLS
SALES BUDGET
QUARTER ENDED MARCH 31, 2018
	JANUARY	FEBRUARY	MARCH	QUARTER
Unit sales	20,000	25,000	25,000	70,000
Unit sales price	100	100	100	100
Budgeted sales revenue	$ 2,000,000	$    2,500,000	$      2,500,000	$    7,000,000

SERGEY CORPORATION
PRODUCTION BUDGET
QUARTER ENDED MARCH 31, 2018
	JANUARY	FEBRUARY	MARCH	QUARTER
Unit sales	20,000	25,000	25,000	70,000
Desired ending inventory	5,000	7,500	12,500	12,500
Total needed	25,000	32,500	37,500	82,500
Beginning inventory	-	5,000	7,500	-
Units to be produced	25,000	27,500	30,000	82,500

QUARTER ENDED MARCH 31, 2018
	JANUARY	FEBRUARY	MARCH	QUARTER
Units to be produced	25,000	27,500	30,000	82,500
Desired ending inventory	6,875.00	7,500	8,125	8,125
Total needed	$            31,875	$     35,000	$     38,125	$     90,625
Less: Beginning inventory	-	6,875	7,500	-
Direct Materials to purchase	31,875	28,125	30,625	90,625
Cost of materials per unit	40	40	40	40
Cost of purchases	$            31,915	$     28,165	$     30,665	$     90,665

SERGEY CORPORATION
DIRECT LABOR BUDGET
QUARTER ENDED MARCH 31, 2018
	JANUARY	FEBRUARY	MARCH	QUARTER
Direct labor hours	0.33	0.33	0.33	0.33
Labor rate per hour	$       24.00	$       24.00	$       24.00	$       24.00
Direct labor cost per unit	$         8.00	$          8.00	$         8.00	$         8.00
Units to be produced	25,000	27,500	30,000	82,500
Direct labor cost	$ 200,000	$   220,000	$   240,000	$ 660,000

SERGEY CORPORATION
MANUFACTURING OVERHEAD BUDGET
QUARTER ENDED MARCH 31, 2018
	JANUARY	FEBRUARY	MARCH	QUARTER
Direct Labor Hours
X Variable Factory Overhead Rate	$            9.00	$           9.00	$           9.00	$           9.00
Total variable overhead
Fixed Costs
Total overhead
Less: Depreciation
Cash payments for overhead
Estimated overhead rate:				$           3.91

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES BUDGET
QUARTER ENDED MARCH 31, 2018
	JANUARY	FEBRUARY	MARCH	QUARTER
Estimated Sales ($)
X Variable SG&A rate	15%	15%	15%	15%
Total variable selling, general and administrative expenses
Fixed costs:
Salaries
Office
Advertising
Total fixed selling & administrative expenses
Total S & A expenses

SERGEY CORPORATION
BUDGETED INCOME STATEMENT
QUARTER ENDED MARCH 31, 2018
	JANUARY	FEBRUARY	MARCH	QUARTER
Sales
Less: Cost of Goods Sold
Gross Margin
Less: S&A Expenses
Interest Expense	5,000	4,750	4,500	14,250
Net Income
Cost Per Unit
Direct Materials
Direct Labor
Factory Overhead
Total Cost per unit

SERGEY CORPORATION
CAPITAL EXPENSES BUDGET
QUARTER ENDED MARCH 31, 2018
	JANUARY	FEBRUARY	MARCH	QUARTER
Capital Expenses	$                -	$              -	$               -	$                -

STORM TOOLS
CASH RECEIPTS AND DISBURSEMENTS BUDGET
QUARTER ENDED MARCH 31, 2018
	JANUARY	FEBRUARY	MARCH	QUARTER
Cash receipts:
Collection of credit sales:
January
February
March
Total cash receipts
Cash disbursements:
Purchases of materials:
January
February
March
Total disbursements for purchases
Payment of direct labor
Payment of overhead
Payment of S & A expenses
Capital acquisition
Financing:
Planned repayment
Interest on note (1/2% of unpaid balance)
Total cash disbursements
Excess or (deficiency)
Plus: Beginning cash balance
Ending cash balance
Sales:
Cash Sales	50%
Remaining 50% on credit with collections as follows
Month of Sale	40%
Month after sale	60%
Direct Material Payments
Month of Sale	0%
Month after sale	100%

SERGEY CORPORATION
BUDGETED BALANCE SHEET
MARCH 31, 2018
ASSETS				LIABILITIES
				Accounts Payable
Cash				Notes Payable - Parent Company
Accounts Receivable
Inventories:				Stockholders' Equity
Direct Materials
Finished Goods				Common Stock
Equipment				Retained Earnings
Less: Accum Depr				Rounding Error		(Should be less than $100)
Total Assets				Total Liabilities and Stockholders' Equity

Answer 1

Sales Budget
	January	February	March	Total
Sales units	20000	25000	25000	70000
Unit selling price	100	100	100	100
Budgeted Sales	2000000	2500000	2500000	7000000
Cash sales - 50%	1000000	1250000	1250000	3500000
Credit Saes - 50%	1000000	1250000	1250000	3500000
Schedule of collections
	January	February	March	Total
Cash sales	1000000	1250000	1250000	3500000
Credit Sales:
January Sales	400000	600000	0	1000000
February Sales		500000	750000	1250000
March Sales			500000	500000
Total collections	1400000	2350000	2500000	6250000
Receivables	600000	750000	750000	750000
Raw material budget
	January	February	March	Total
Budgeted Production	25000	27500	30000	82500
Cost of raw material per unit	40	40	40	40
Raw material required for production	1000000	1100000	1200000	3300000
Add: Desired ending inventory	220000	240000	260000	260000
(20% of next month's requirement)
Total material needed	1220000	1340000	1460000	3560000
Less: Begining Inventory	0	220000	240000	0
Budgeted Raw material purchases	1220000	1120000	1220000	3560000
Schedule of cash payments for purchases
	January	February	March	Total
January purchases	0	1220000		1220000
February purchases		0	1120000	1120000
March purchases			0	0
Total payments	0	1220000	1120000	2340000
Payables	1220000	1120000	1220000	1220000
Direct labor budget
	January	February	March	Total
Budgeted Production	25000	27500	30000	82500
Direct labour hours per unit (20/60)	0.33	0.33	0.33	0.33
Direct labor hours for production	8333	9167	10000	27500
Direct labor cost per hour	$24.00	$24.00	$24.00	$24.00
Direct labor cost	200000	220000	240000	660000
Manufacturing overhead budget
	January	February	March	Total
Direct labor hours needed   (DLH)	8333	9167	10000	27500
Variable manufacturing overhead per DLH	$9	$9	$9	$9
TotL Variable manufacturing overhead	75000	82500	90000	247500
Fixed manufacturing overhead	25000	25000	25000	75000
Total manufacturing overhead	100000	107500	115000	322500
Depreciation Expense	15000	15000	15000	45000
Cash payment for manufacturing overheads	85000	92500	100000	277500
Selling and administrative expenses budget
	January	February	March	Total
Variable selling and admin. Expenses (15% of sales)	300000	375000	375000	1050000
Fixed selling and admin. Expenses
Salaries Expense	100000	100000	100000	300000
Office Expense	40000	40000	40000	120000
Advertising expense	75000	75000	75000	225000
Total fixed selling andadmin. Expenses	215000	215000	215000	645000
Selling and administrative expenses budget	515000	590000	590000	1695000
Cash payment for selling and admin. Expenses	515000	590000	590000	1695000
CASH BUDGET
	January	February	March	Total
Beginning cash balance	500000	1045000	1217750	500000
Add: Collections from sales	1400000	2350000	2500000	6250000
total cash available for disbursements	1900000	3395000	3717750	6750000
Cash disbursements:
For raw material	0	1220000	1120000	2340000
For direct labor	200000	220000	240000	660000
For manufacturing overhead	85000	92500	100000	277500
For selling and administrative expenses	515000	590000	590000	1695000
For repayent of note	50000	50000	50000	150000
For interest	5000	4750	4500	14250
Total cash disbursements	855000	2177250	2104500	5136750
Cash Surplus	1045000	1217750	1613250	1613250
Ending cash balance	1045000	1217750	1613250	1613250
STORM TOOLS
Budgeted Profit and Loss Account
For the quaeter ending March 31, 2018
Sales	7000000
Cost of goods sold	3633636
Gross profit	3366364
Selling and admin. Expenses:
Variable expenses	1050000
Salaries expense	300000
Office Expense	120000
Advertising Expense	225000
Total selling and admn. Expenses	1695000
Net operating income	1671364
Interest Expense	14250
Net income	1657114
Working:
Cost of production
Direct material	3300000
Direct labor	660000
Manufacturing overheads	322500
Total cost	4282500
Production	82500
Cost per unit	51.91
Ending Finished goods   - units (82,500 - 70,000)	12500
Value of finished goods	648864
Cost of goods sold (4,282,500 - 648,864)	3633636
STORM TOOLS
Budgeted Balance Sheet
as at March 31, 2018
Assets
Cash		1613250
Accounts Receivables		750000
Raw material inventory		260000
Finished Goods Inventory		648864
Total Current Assets		3272114
Plant and equipment	2500000
Less: Accumulated Depreciation	45000	2455000
Total Assets		5727114
Liabilities and Stockholders' equity
Accounts Payable		1220000
Notes Payable		850000
Total Liabilities		2070000
Stockholders' equity
Common stock		2000000
Retained earnings		1657114
Total Stockholders' equity		3657114
Total Liabilities and Stockholders' Equity		5727114