Answer all parts with correct explanation calculation clearly for all steps and parts answer in text form Lane Products manufactures a popular kitchen utensil. The company recently expanded, and the controller believes that it willneed to borrow cash to continue operations. It opened negotiations with the local bank for a one-month loan of $64,000 startingMarch 1. The bank would charge interest at the rate of 0.5 percent per month and require the company to repay interest andprincipal on March 31. In considering the loan, the bank requested a projected income statement and cash budget for March.The following information is available:The company budgeted sales at 24,000 units per month in February, April, and May and at 21,000 units in March. The sellingprice is $72 per unit.The company offers a 2 percent discount for cash sales. The company's experience is that bad debts average 1 percent ofcredit sales.The inventory of finished goods on February 1 was 3,600 units. The desired finished goods inventory at the end of each monthequals 25 percent of sales anticipated for the following month. There is no work in process.The inventory of raw materials on February 1 was 2,880 pounds. At the end of each month, the raw materials inventory equalsno less than 20 percent of production requirements for the following month. The company purchases materials in quantities of310 pounds per shipment.Selling expenses are 6 percent of gross sales. Administrative expenses, which include depreciation of $1,350 per month onoffice furniture and fixtures, total $75,600 per month.The manufacturing budget for the utensil, based on normal production of 23,000 units per month, follows.Materials (X pound per utensil, 11,500 pounds, $30 per pound)LaborVariable overheadFixed overhead (includes depreciation of $44,880)TotalRequired:$ 345,000132,00072,000132,000$ 681,000a-1. Prepare schedules computing inventory budgets by months for production in units for February, March, and April.a-2. Prepare schedules computing Inventory budgets by months for raw materials purchases in pounds for February and March.b. Prepare a projected income statement for March. Cost of goods sold should equal the variable manufacturing cost per unit timesthe number of units sold plus the total fixed manufacturing cost budgeted for the period. Assume that 40 percent of sales are cashsales.Complete this question by entering your answers in the tabs below.Required A1 Required A2 Required BPrepare schedules computing inventory budgets by months for production in units for February, March, and April.Lane ProductsProduction Schedule Budget (Units)For February, March, and AprilBudgeted salesAdd: Inventory required at end of monthTotal needsLess: Inventory on hand at beginning of monthBudgeted production-UnitsFebruaryMarchApril24,00021,00024,0005,2506,0006,00029,25027,00030,0003,60025.6505,2506.00021,75024,000Required AtRequired A2 >Required A1 Required A2 Required BPrepare schedules computing inventory budgets by months for raw materials purchases in pounds for February and March.Raw Materials InventoryBudgeted production needs in poundsPurchase Budget (Pounds)For February and MarchFebruary25,650March21,75025,65021,75025,65021,750Add: Inventory required at end of monthTotal pound needsAdd: Inventory on hand at beginning of monthBalance required to purchaseBudgeted purchases - PoundsPrepare a projected income statement for March. Cost of goods sold should equal the variable manufacturing cost per unittimes the number of units sold plus the total fixed manufacturing cost budgeted for the period. Assume that 40 percent ofsales are cash sales.Note: Do not round intermediate calculations. Round your final answers to nearest whole dollar.Net salesCost of sales:Expenses:Lane ProductsProjected Income StatementFor the Month of March$$Show less A

Inventory budgeting involves estimating and arranging the amount of natural substances, work…

Lane Products manufactures a popular kitchen utensil. The company recently expanded, and the controller believes that it will need to borrow cash to continue operations. It opened negotiations with the local bank for a one-month loan of $64,000 starting March 1. The bank would charge interest at the rate of 0.5 percent per month and require the company to repay interest and principal on March 31. In considering the loan, the bank requested a projected income statement and cash budget for March. The following information is available: The company budgeted sales at 24,000 units per month in February, April, and May and at 21,000 units in March. The selling price is $72 per unit. The company offers a 2 percent discount for cash sales. The company's experience is that bad debts average 1 percent of credit sales. The inventory of finished goods on February 1 was 3,600 units. The desired finished goods inventory at the end of each month equals 25 percent of sales anticipated for the following month. There is no work in process. The inventory of raw materials on February 1 was 2,880 pounds. At the end of each month, the raw materials inventory equals no less than 20 percent of production requirements for the following month. The company purchases materials in quantities of 310 pounds per shipment. Selling expenses are 6 percent of gross sales. Administrative expenses, which include depreciation of $1,350 per month on office furniture and fixtures, total $75,600 per month. The manufacturing budget for the utensil, based on normal production of 23,000 units per month, follows. Materials (X pound per utensil, 11,500 pounds, $30 per pound) Labor Variable overhead Fixed overhead (includes depreciation of $44,000) Total $345,000 132,000 72,000 132,000 $ 681,000

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q