Question

*Waterways Continuing Problem-10 Waterways Corporation has recently acquired a small manufacturing operation in British Columbia that...

*Waterways Continuing Problem-10

Waterways Corporation has recently acquired a small manufacturing operation in British Columbia that produces one of its more popular items. This plant will provide these units for resale in retail hardware stores in British Columbia and Alberta. Because the budget prepared by the plant was incomplete, Jordan Leigh, Waterways’ CFO, was sent to B.C. to oversee the plant’s budgeting process for the second quarter of 2017.

Jordan asked the various managers to collect the following information for preparing the second-quarter budget.
Sales
Unit sales for February 2017 90,000
Unit sales for March 2017 102,000
Expected unit sales for April 2017 110,000
Expected unit sales for May 2017 115,000
Expected unit sales for June 2017 120,000
Expected unit sales for July 2017 135,000
Expected unit sales for August 2017 160,000
Average unit selling price $12

Based on the experience from the home plant, Jordan has suggested that the B.C. plant keep 10% of the next month’s unit sales in ending inventory. The plant has contracts with some of the major home hardware giants, so all sales are on account; 50% of the accounts receivable is collected in the month of sale, and the balance is collected in the month after sale. This was the same collection pattern from the previous year. The new plant has no bad debts.

Direct Materials

The combined quantity of direct materials (consisting of metal, plastic and rubber) used in each unit is 1.40 kg. Metal, plastic, and rubber together amount to $1.50 per kg. Inventory of combined direct material on March 31 consisted of 15,470 kg.

This plant likes to keep 10% of the materials needed for the next month in its ending inventory. Fifty percent of the payables is paid in the month of purchase, and 50% is paid in the month after purchase.

Accounts Payable on March 31 will total $122,400.

Direct Labour

Labour requires 15 minutes per unit for completion and is paid at an average rate of $10 per hour.
Manufacturing Overhead
Indirect materials $0.00 per labour hour
Indirect labour $0.60 per labour hour
Utilities $0.50 per labour hour
Maintenance $0.40 per labour hour
Salaries $44,200 per month
Depreciation $15,000 per month
Property taxes $2,050 per month
Insurance $1,450 per month
Janitorial $2,600 per month
Selling and Administrative
Variable selling and administrative cost per unit is $1.60.
   Advertising $14,000 a month
   Depreciation $2,900 a month
   Insurance $1,400 a month
   Other fixed costs $3,100 a month
   Salaries $73,000 a month

Other Information

The Cash balance on March 31 will be $149,500, but Waterways has decided it would like to maintain a cash balance of at least $500,000 beginning on April 30. The company has an open line of credit with its bank. The terms of the agreement require borrowing to be in $1,000 increments at 4% interest. Borrowing is considered to be on the first day of the month and repayments are on the last day of the month. Assume interest is paid at the end of the quarter.

In May, $790,000 of new equipment to update operations will be purchased.

Three months’ insurance is prepaid on the first day of the first month of the quarter.

*(a)

For the second quarter of 2017, prepare a sales budget.
WATERWAYS CORPORATION
British Columbia Production Plant
Sales Budget for the 2nd Quarter, 2017
April May June Total

Sales in units

                   

               

             

              

Per unit selling price

$ $ $ $

Total expected sales

$ $ $ $

Homework Answers

Answer #1
WATERWAYS CORPORATION
British Columbia Production Plant
Sales Budget for the 2nd Quarter, 2017
April May June Total
Sales in units 110000 115000 120000 345000
Per unit selling price $                    12 $               12 $               12
Total expected sales $      13,20,000 $ 13,80,000 $ 14,40,000 $ 41,40,000
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Waterways Continuing Problem-10 (Part Level Submission) Waterways Corporation has recently acquired a small manufacturing operation in...
Waterways Continuing Problem-10 (Part Level Submission) Waterways Corporation has recently acquired a small manufacturing operation in British Columbia that produces one of its more popular items. This plant will provide these units for resale in retail hardware stores in British Columbia and Alberta. Because the budget prepared by the plant was incomplete, Jordan Leigh, Waterways’ CFO, was sent to B.C. to oversee the plant’s budgeting process for the second quarter of 2017. Jordan asked the various managers to collect the...
Waterways Corporation is preparing its budget for the coming year, 2020. The first step is to...
Waterways Corporation is preparing its budget for the coming year, 2020. The first step is to plan for the first quarter of that coming year. The company has gathered information from its managers in preparation of the budgeting process. 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 114,000 Expected unit sales for March 2020 115,000 Expected unit sales for April 2020 124,000...
Waterways Corporation is preparing its budget for the coming year, 2020. The first step is to...
Waterways Corporation is preparing its budget for the coming year, 2020. The first step is to plan for the first quarter of that coming year. The company has gathered information from its managers in preparation of the budgeting process. Sales Unit sales for November 2019 113,000 Unit sales for December 2019 101,000 Expected unit sales for January 2020 114,000 Expected unit sales for February 2020 114,000 Expected unit sales for March 2020 117,000 Expected unit sales for April 2020 124,000...
Bart and Lisa operate a manufacturing operation in southern New Brunswick. They make a single product....
Bart and Lisa operate a manufacturing operation in southern New Brunswick. They make a single product. In order to help ensure a successful year they have engaged you to prepare a complete master budget for the upcoming quarter. Lisa is a qualified engineer but not overly sophisticated in financial matters. Bart handles the design and marketing of their company’s products. You have gathered the following information as of March 31, 2020: B&L Manufacturing Balance Sheet March 31, 2020 Cash                                ...
The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2017: ZIGBY MANUFACTURING...
The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2017: ZIGBY MANUFACTURING Estimated Balance Sheet March 31, 2017 Assets Cash $ 80,000 Accounts receivable 487,500 Raw materials inventory 93,390 Finished goods inventory 438,000 Total current assets 1,098,890 Equipment, gross 640,000 Accumulated depreciation (170,000 ) Equipment, net 470,000 Total assets $ 1,568,890 Liabilities and Equity Accounts payable $ 215,690 Short-term notes payable 32,000 Total current liabilities 247,690 Long-term note payable 520,000 Total liabilities 767,690 Common stock 355,000...
Evergreen Corporation is preparing the master budget for the third quarter ending March 31, 2009.  It sells...
Evergreen Corporation is preparing the master budget for the third quarter ending March 31, 2009.  It sells a single product for $20 a unit.  Sales are 25% cash and 75% credit.  The credit sales are collected 30% in the month of the sale and the remaining 70% is collected in the next month.  No credit sales occurred in December 2008. The December 31 inventory of finished goods is 15,000 units and projected sales are 20,000, 55000, 65,000, 75,000, and 85,000 units for the first  months...
Problem 9-4 Karam Inc. has compiled the following data in order to put together their first...
Problem 9-4 Karam Inc. has compiled the following data in order to put together their first quarter operating budget for 2011: January February March April Sales (units) 35,000 31,000 38,000 29,000 Each unit requires three hours of direct labor. Additional information: Karam sells each unit for $95. Company policy is to have 30 percent of next month's sales (in units) in ending finished goods inventory. Company policy is to have 40 percent of next month's production needs in ending raw...
Question Simple Life Food Ltd is a manufacturer of ‘ready to eat meal’ and sells to...
Question Simple Life Food Ltd is a manufacturer of ‘ready to eat meal’ and sells to various food outlets for credit and cash basis. The management wants to prepare a master budget for the first ten months of the year ending 31 October 2019, and has compiled the following data: 1. The firm sells a single type of set menu at a price of $24 per set. The sales forecast (in sets) prepared by the marketing department for the ten...
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. . . . . . . ....
Spiffy Shades Corporation manufactures artistic frames for sunglasses.
Spiffy Shades Corporation manufactures artistic frames for sunglasses. Talia Demarest, controller, is responsible for preparing the company’s master budget. In compiling the budget data for 20x1, Demarest has learned that new automated production equipment will be installed on March 1. This will reduce the direct labor per frame from 5.0 hours to 4.75 hours.Labor-related costs include pension contributions of $0.55 per hour, workers’ compensation insurance of $0.25 per hour, employee medical insurance of $1 per hour, and employer contributions to...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT