Question

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. . . . . . . . . . . . . . . . . . . . . . . .$15,000

Property, plant, and equipment, net. . . . . . . . . . . . . $121,000

Accounts payable. . . . . . . . . . . . . . . . . . . . . . .$43,000

Capital stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$127,000

Retained earnings. . . . . . . . . . . . . . . . . . . . . . .$22,500

Requirement 1. Prepare a schedule of cash collections for​ January, February, and​ March, and for the quarter in total.

Dalton Manufacturing
Cash Collections Budget
For the Quarter Ended March 31
	Month

	January	February	March	Quarter
Cash sales	$24,030	$26,730	$24,840	$75,600
Credits sales	53,200	56,070	62,370	171,640
Total cash collections	$77,230	$82,800	$87,210	$247,240

Requirement 2. Prepare a production budget.​ (Hint: Unit sales​ = Sales in dollars​ / Selling price per​ unit.)

Dalton Manufacturing
Production Budget
For the Quarter Ended March 31
	Month

	January	February	March	Quarter
Unit sales
Plus: Desired ending inventory
Total needed
Less: Beginning inventory
Units to produce

Addititonal Data:

Actual sales in December were

$ 76 comma 000$76,000.

Selling price per unit is projected to remain stable at

$ 9$9

per unit throughout the budget period. Sales for the first five months of the upcoming year are budgeted to be as​ follows:

January. . . . . . . .	$80,100
February. . . . . . . . .	$89,100
March. . . . . . . . .	$82,800
April. . . . . . . . . .	$85,500
May. . . . . . . . . . . . . .	$77,400

b.

Sales are 30​% cash and 70​% credit. All credit sales are collected in the month following the sale.

c.

Dalton 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.Two pounds of direct material is needed per unit at $ 1.50$1.50
per pound. Ending inventory of direct materials should be 20% of next​ month's production needs.

e.

Most of the labor at the manufacturing facility is​ indirect, but there is some direct labor incurred. The direct labor hours per unit is 30.03.The direct labor rate per hour is $13 per hour. All direct labor is paid for in the month in which the work is performed. The direct labor total cost for each of the upcoming three months is as​ follows:

January. . . . . . . .	$3,510
February. . . . . . . . .	$3,834
March. . . . . . . . .	$3,600

f.

Monthly manufacturing overhead costs are $6,500
for factory​ rent, $2,900 for other fixed manufacturing​ expenses, and $1.40 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.

g.

Computer equipment for the administrative offices will be purchased in the upcoming quarter. In​ January, Dalton Manufacturing will purchase equipment for $5,800
​(cash), while​ February's cash expenditure will be $11,600 and​ March's cash expenditure will be $15,800.

h.

Operating expenses are budgeted to be $1.20 per unit sold plus fixed operating expenses of $1,400 per month. All operating expenses are paid in the month in which they are incurred. No depreciation is included in these figures.

i.

Depreciation on the building and equipment for the general and administrative offices is budgeted to be $4,700 for the entire​ quarter, which includes depreciation on new acquisitions.  

j.

Dalton Manufacturing has a policy that the ending cash balance in each month must be at least $4,400. 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 is 11​% per month simple interest​ (not compounded). The company would pay down on the line of credit balance in increments of $1,000
if it has excess funds at the end of the quarter. The company would also pay the accumulated interest at the end of the quarter on the funds borrowed during the quarter.

k.

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.

I need help with requirement 2 please

Answer 1

As per your request, i have answered only the requirement 2:

Dalton Manufacturing
Production Budget
For the Quarter Ended March 31
	Month
	January	February	March	Quarter
Units sales ($80,100/$9); ($89,100/$9); ($82,800/$9)	8,900	9,900	9,200	28,000
Plus: Desired ending inventory (9,900*10/100); (9,200*10/100); ($85,500/$9 = 9,500*10/100)	891	920	950	2,761
Total Needed	9,791	10,820	10,150	30,761
Less: Beginning Inventory (8,900*10/100); (last month's ending inventory will be the beginning inventory in current month)	890	891	920	2,701
Units to Produce	8,901	9,929	9,230	28,060