Question

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

Data Table

Current Assets as of December 31 (prior year):
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . .	$4,640
Accounts receivable, net. . . . . . . . . . . . . . .	$51,000
Inventory. . . . . . . . . . . . . . . . . . . . . . . .	$15,400
Property, plant, and equipment, net. . . . . . . . . . . .	$120,500
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . .	$42,800
Capital stock. . . . . . . . . . . . . . . . . . . . . . . . . .	$123,500
Retained earnings. . . . . . . . . . . . . . . . . . . . . . . . .	$23,100

Information

a. Actual sales in December were $72,000. Selling price per unit is projected to remain stable at $12 per unit throughout the budget period. Sales for the first five months of the upcoming year are budgeted to be as​ follows: January. . . . . . . . . $104,400 February. . . . . . . . $108,000 March. . . . . . . . . . $112,800 April. . . . . . . . . . . . $109,200 May. . . . . . . . . . . . $105,600
b.	Sales are 20​% cash and 80​% credit. All credit sales are collected in the month following the sale.
c.	Jesper 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. Three kilograms of direct material is needed per unit at $2.00​/kg. Ending inventory of direct materials should be 30% of next​ month's production needs.

e.	Monthly manufacturing conversion costs are $4,500 for factory​ rent, $2,800 for other fixed manufacturing​ expenses, and $1.10 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.
f.	Computer equipment for the administrative offices will be purchased in the upcoming quarter. In​ January, Jesper Manufacturing will purchase equipment for $6,000 (cash), while​ February's cash expenditure will be $12,800 and​ March's cash expenditure will be $15,600.
g.	Operating expenses are budgeted to be $1.30 per unit sold plus fixed operating expenses of $1,800 per month. All operating expenses are paid in the month in which they are incurred.
h.	Depreciation on the building and equipment for the general and administrative offices is budgeted to be $5,600 for the entire​ quarter, which includes depreciation on new acquisitions.
i.	Jesper Manufacturing has a policy that the ending cash balance in each month must be at least $4,200. 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 is22​% per month simple interest​ (not compounded). Jesper Manufacturing pays down on the line of credit balance if it has excess funds at the end of the quarter. The company also pays the accumulated interest at the end of the quarter on the funds borrowed during the quarter.
j.	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.

Requirements

1.	Prepare a schedule of cash collections for​ January, February, and​ March, and for the quarter in total.
2.	Prepare a production budget.​ (Hint: Unit sales​ = Sales in dollars​ / Selling price per​ unit.)
3.	Prepare a direct materials budget.
4.	Prepare a cash payments budget for the direct material purchases from Requirement 3.
5.	Prepare a cash payments budget for conversion costs.
6.	Prepare a cash payments budget for operating expenses.
7.	Prepare a combined cash budget.
8.	Calculate the budgeted manufacturing cost per unit.​ (Assume that fixed manufacturing overhead is budgeted to be $0.80 per unit for the​ year.)
9.	Prepare a budgeted income statement for the quarter ending March 31.​ (Hint: Cost of goods sold​ = Budgeted cost of manufacturing each unit x Number of units​ sold.)
10.	Prepare a partial budgeted balance sheet for March 31. Include Loans Payable and Income Tax Payable.

Answer 1