SOLUTION
Chapter 9 Waterways Continuing Problem
WCP9
(a) Sales budget
WATERWAYS CORPORATION
Sales Budget
For the First Quarter of 2017
First Quarter
January
February
March
Quarter
Expected unit sales
113,000
112,500
116,000
341,500
(b) Production budget
WATERWAYS CORPORATION
Production Budget
For the First Quarter of 2017
First Quarter
January
February
March
Quarter
Expected unit sales
113,000
112,500
116,000
341,500
Add: Desired ending finished goods units
11,250
11,600
12,500*
12,500
Total required units
124,250
124,100
354,000
Less: Beginning finished goods units
11,250
11,300
Required production units
112,950
112,850
116,900
342,700
(c) Direct materials budget
WATERWAYS CORPORATION
Direct Materials Budget
For the First Quarter of 2017
First Quarter
January
February
March
Quarter
Units to be produced (from part b)
112,950
112,850
116,900
342,700
Direct materials per unit
X 2
X 2
X 2
X 2
Total pounds needed for production
225,900
225,700
233,800
685,400
(d) Direct labor budget
WATERWAYS CORPORATION
Direct Labor Budget
For the First Quarter of 2017
First Quarter
January
February
March
Quarter
Units to be produced (from part b)
112,950
112,850
116,900
342,700
Total required direct labor-hours
23,380
68,540
Direct labor cost per hour
Total materials required
237,185
237,390
246,425
698,025
Less: Beginning direct materials (lbs)
11,690
11,295
Direct materials purchases
225,890
226,105
234,735
686,730
Cost per pound
X $0.75
X $0.75
(e) Manufacturing overhead budget
WATERWAYS CORPORATION
Manufacturing Overhead Budget
For the First Quarter of 2017
First Quarter
January
February
March
Quarter
Variable costs
Indirect materials (30¢ per hour)
$ 6,777
$ 6,771
$ 7,014
$ 20,562
Indirect labor (50¢ per hour)
11,295
11,285
11,690
34,270
Fixed costs
Salaries
42,000
42,000
42,000
126,000
Depreciation
16,800
16,800
16,800
50,400
Property taxes
2,675
2,675
2,675
8,025
Insurance
1,200
1,200
1,200
3,600
Maintenance
Fixed manufacturing overhead
$97,859
$97,831
$99,045
$294,735
Total manufacturing overhead
22,590
22,570
23,380
68,540
(f) Selling and administrative expense budget
WATERWAYS CORPORATION
Selling and Administrative Expense Budget
For the First Quarter of 2017
First Quarter
January
February
March
Quarter
Budget sales in units (from part a)
113,000
112,500
116,000
341,500
Variable expenses per unit
Total variable S & A expense
Fixed expenses:
Total fixed expenses
Total S & A expenses
Utilities (45¢ per hour)
10,165
10,157
10,521
30,843
Maintenance (25¢ per hour)
(g) Collections from customers
Schedule of Expected Collections from Customers
January
February
March
Accounts receivable, 12/31/16
$ 183,780
January ($1,356,000)
1,152,600*
$ 203,400**
(h) Payments for direct materials
Schedule of Expected Payments for Direct Materials
January
February
March
Quarter
Accounts payable, 12/31/16
$120,595.00
$120,595.00
$ 84,789.50
February ($1,350,000)
March ($1,392,000)
Total cash collections
$1,385,700
(i) Cash budget
WATERWAYS CORPORATION
Cash Budget
For the first Quarter of 2017
First Quarter
January
February
March
Quarter
Beginning cash balance
$ 100,500
$ 800,097
$ 819,474
$ 100,500
Add: Receipts
Less: Disbursements
Direct materials
205,304
169,499
172,815
547,618
Direct labor
180,720
180,560
187,040
548,320
Manufacturing overhead*
244,335
Selling and administrative*
272,200
271,400
277,000
820,600
Equipment purchase
500,000
500,000
Dividends
12,500
12,500
12,500
37,500
Total disbursements
751,783
1,214,990
731,600
2,698,373
over cash disbursements
685,097
936,007
Financing:
Borrowings
115,000
—
—
115,000
Repayments
(115,000)
—
Interest
(1,533)
(1,533)
Ending cash balance
$ 800,097
$ 819,474
$1,473,574
$1,473,574
*Adjusted for depreciation
Collections from customers
1,336,380
1,350,900
1,385,700
4,072,980
Total available cash
1,436,880
2,150,997
2,205,174
4,173,480