| Schedule 1: Sales Budget |
| | | April | May | June | July | August |
| Sales in units | | 20,000 | 50,000 | 30,000 | 25,000 | 15,000 |
| Sales price per unit | | $ 10.00 | $ 10.00 | $ 10.00 | $ 10.00 | $ 10.00 |
| Schedule 2: Cash receipts |
| 1. All sales are on account. |
| 2. The accounts receivable balance on March 31 was $30,000. All of this balance was collectible. |
| 3. The company collects 70% of these credit sales in the month of the sale; |
| 25% are collected in the month following sale; and the remaining 5% are uncollectible. |
| Cash in initial quarter | | 70% |
| Cash in subsequent month | | 30% |
| Beg. Accounts receivable | | $9,000 |
| Schedule 3: Production Budget in Units |
| 1. ABC plans to stock ending inventory of finished goods to equal 20% of the next quarter's sales. |
| 2.Finished Goods inventory at 1/1/20X7 is 200 statues at a cost of $10 per unit |
| EI-FG as % of next quarter sales | | 20% |
| Beg. Inventory | | 200 |
| Schedule 4: Direct Materials Purchases |
| 1. Five lbs. of material are required per unit of product |
| 2. The material costs $0.40 per lb. |
| 3. Management desires to have materials on hand at the end of each month equal to |
| 10% of the following month’s production needs. |
| 4. The beginning materials inventory was 13,000 lbs. |
| Each unit requires in lbs | | 5 |
| cost per lb | | $ 0.40 |
| Beg Inv RM in lbs | | 13,000 |
| EI RM of % next month | | 10% |
| Schedule 5: Cash Purchases Budget |
| 1. Half of a month’s purchases are paid for in the month of purchase; |
| the other half is paid for in the following month. |
| 2. There are no discounts for early payment. |
| 3. The accounts payable balance on March 31 was $12,000. |
| They are all collected in April. |
| Purchase on Credit | | 50% |
| Purchase on Cash | | 50% |
| Schedule 6: Direct Labor Budget |
| Each unit produced requires 0.05 hour of direct labor. |
| Each hour of direct labor costs the company $10. |
| Management fully adjusts the workforce to the workload each month. |
| DLH per unit | | 0.05 |
| cost per DLH | | $ 10.00 |
| Schedule 7: Overhead Budget |
| 1. Variable manufacturing overhead is $20 per direct labor hour. |
| 2. Fixed manufacturing overhead is $50,500 per month. |
| This includes $20,500 in depreciation, which is not a cash outflow. |
| Var MO per DLH | | $ 20.00 |
| Fixed MO per month | | $ 50,500 |
| Depr in Fixed MO per month | | $ 20,500 |
| Schedule 8: Ending Finished goods |
| 1. Royal Company uses absorption costing in its budgeted income statement and balance sheet. |
| 2. Manufacturing overhead is applied to units of product on the basis of direct labor hours. |
| 3. The company has no work in process inventories. |
| Schedule 9: Selling and Administrative Expense Budget |
| Variable selling and administrative expenses are $0.50 per unit sold. |
| Fixed selling and administrative expenses are $70,000 per month and include $10,000 in depreciation. |
| Var Selling per unit | | $ 0.50 |
| Fixed selling per month | | $ 70,000 |
| Depr incl in fixed selling per month 10,000 | | $ 10,000 |
| Schedule 10: Cash Budget |
| 1. A line of credit is available at a local bank, which allows the company to borrow up to $75,000. |
| a. All borrowing occurs at the beginning of the month, |
| and all repayments occur at the end of the month. |
| b. Any interest incurred during the second quarter will be paid at the end of the quarter |
| The interest rate is 16% per year. |
| 2. Royal Company desires a cash balance of at least $30,000 at the end of each month. |
| The cash balance at the beginning of April was $40,000. |
| 3. Cash dividends of $51,000 are to be paid to shareholders in April. |
| Equipment purchases of $143,700 are scheduled for May and $48,800 for June. |
| 4. This equipment will be installed and tested during the second quarter and will not |
| become operational until July, when depreciation charges will commence. |
| Interest rate per year | | 16% |
| Interest rate per quarter | | 4% |
| Minimum Cash | | $ 30,000 |
| Dividends: |
| April | | $ 51,000 |
| May | | $ - 0 |
| June | | $ - 0 |
| Equipment purchases |
| April | | $ - 0 |
| May | | $ 143,700 |
| June | | $ 48,800 |