Budget 1

Budget project
budget for a year for a company. Please use a separate tab for each segment (sales, inventory, direct material, direct labor, overhead, and cash).
Sales
 begins with 5,000 units and increases2% per month
 the sale price at the beginning of the year is $28 per unit
 on May 1 we intend to raise our price per unit to $29
 on October 1 we intend to raise our price per unit to $30
 15% of sales are cash
Inventory
 begins with 1,150 units
 Maintain an ending balance each month equal to 25% of next month production
Direct material
 2 pounds of raw material needed for each unit of production
 Begin with raw materials of 3,000 pounds
 End each month with 30% of next month needed material
 Cost per pound starts the year at $1.25
 On July 1 we expect a price increase of $ 0.20 per pound
Direct labor
 Each unit produced uses 1 hour of type one labor and .5 hours of type two labor
 Type one labor is paid $12 per hour
 Type two labor is paid $20 per hour
Overhead
 Indirect material is 5% of production (units)
 Repairs and maintenance is 2% of production (units)
 Sales commissions are 3% of sales (dollars)
 Depreciation is $500 per month
 Fixed labor (overhead) is $800 per month
 Insurance and taxes are $300 and $250 per month respectively
Cash
 The bank charges a 2% fee on card purchases (cash purchases)
 5% of credit sales are collected in the month of the purchase
 85% of credit sales are collected in the month following the month of purchase
 9% of credit sales will be collected in the month following
 A dividend of $4,000 is paid at the end of each quarter (3/31, 6/30, 9/30 and 12/31)
 Equipment of $20,000 will be purchased on May 15.
The company must maintain a minimum cash balance of $5,000 per our debt covenant. The company
has a line of credit for short-term borrowing. The interest rate on the line of credit is 5%. Interest will
be paid monthly on the line of credit.
Balance sheet information
Accounts receivable on November 30 was $ 105,000
Accounts receivable on December 31 was $ 110,000
Cash on December 31 was $11,000
Corrections:
The project states the following:
Accounts receivable on November 30 was $ 105,000
Accounts receivable on December 31 was $ 110,000
It should say:
Accounts receivable Sales for November was $105,000
Accounts receivable Sales for December was $110,000
Equipment purchase price should be $30,000

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