Master Budget Preparation

(Master budget preparation) Sopchoppy Company manufactures a red industrial dye. The company is preparing its 2000 master budget and has presented you with the following information. 1. The December 31, 1999, brace sheet for the company is shown below. SOPCHOPPY COMPANY Balance Sheet December 31, 1999 AssetsLiabilities and Stockholders Equity Cash $ 5,080 Notes Payable $ 25,000 Accounts due 26,500 Accounts Payable 2,148 Raw Materials Inventory 800 Dividends Payable 10,000 ruined Goods Inventory 2,104 Total Liabilities $ 37,148 Pre nonrecreational Insurance 1,200 Common Stock $100,000Building $300,000 Paid-in Capital 50,000 Accumulated Depreciation (20,000) 280,000 Retained Earnings 128,536 278,536 Total Liabilities and Total Assets $315,684 Stockholders Equity $315,684 2. The Accounts Receivable balance at 12/31/99 represents the remaining balances of November and December credit sales. Sales were $70,000 and $65,000, respectively, 3. Estimated sales in gallons of dye for January through May 2000 atomic number 18 shown below. January 8,000February 10,000 work 15,000 April 12,000 May 11,000 Each gallon of dye sells for $12. 4. The collection pattern for accounts receivable is as follows 70 percent in the month of sale 20 percent in the first month after the sale 10 percent in the second month after the sale. Sopchoppy expects no bad debts and no customers are given bills discounts. 5. Each gallon of dye has the following standard quantities and costs for broadcast literals and direct travail 1. 2 gallons of direct material (some evaporation occurs during processing) $0. 80 per gallon $0. 6 1/2 hour of direct labor $6 per hour 3. 00 Variable overhead is applied to the crop on a machine-hour basis. It takes 5 hours of machine time to process 1 gallon of dye. The variable overhead rate is $0. 06 per machine hour VOH consists entirely of utility(prenominal) costs. Total annual fixed overhead is $120,000 it is applied at $1. 00 per gallon based on an ev aluate annual capacity of 120,000 gallons. Fixed overhead per yr is composed of the following costs Salaries $78,000 Utilities 12,000 Insurancefactory 2,400 Depreciationfactory 27,600Fixed overhead is incurred evenly throughout the year. 6. There is no pedigree inventory of twist in Process. All work in process is completed in the period in which it is started. Raw Materials Inventory at the starting of the year consists of 1,000 gallons of direct material at a standard cost of $0. 80 per gallon. There are 400 gallons of dye in Finished Goods Inventory at the beginning of the year carried at a standard cost of $5. 26 per gallon Direct Material, $0. 96 Direct Labor, $3. 00 Variable Overhead, $0. 30 and Fixed Overhead, $1. 00. 7.Accounts Payable relates only when to raw material. Accounts Payable are paid 60 percent in the month of purchase and 40 percent in the month after purchase. No discounts are given for prompt payment. 8. The dividend will be paid in January 2000. 9. A new piece of equipment costing $9,000 will be purchased on March 1, 2000. Payment of 80 percent will be made in March and 20 percent in April. The equipment will have no alleviate value and has a useful life of three years. 10. The note payable has a 12 percent interest rate interest is paid at the end of each month.The principal of the note is paid off as cash is available to do so. 11. Sopchoppys management has set minimum cash balance at $5,000. 12. The ending Finished Goods Inventory should be 5 percent of the next months needs. This is not true at the beginning of 2000 due to a miscalculation in sales for December. The ending inventory of raw materials should be 5 percent of the next months needs. 13. sell and administrative costs per month are budgeted to be 30 percent of each months sales. Of that amount, 50 percent is depreciation.These costs are paid in cash as they are incurred. 14. Prepare a master budget for each month of the first quarter of 2000. a. sales budget with ex pected cash collections, including the accounts receivable for the next quarter b. production budget c. purchase budget with expected cash payments, including the accounts payable for the next quarter d. direct labor budget e. manufacturing overhead budget f. finished goods ending inventory budget g. selling and administrative budget h. cash budget i. balance sheet j. income arguing