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Based on the information below, you are to prepare all operations budgets, financial budgets and schedules for a bicycle manufacturer.

Scenario:

Wing Bicycle Company manufactures and sells 2 sizes of bicycles, 21.5 inch and 22.5 inch.

Their sales team has committed to the following projected monthly unit sales for the next year.

	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
21.5 Bike	368	472	633	616	443	345	322	317	317	317	328	420
22.5 Bike	320	410	550	535	385	300	280	275	275	275	285	365

The selling price for the 21.5 inch bike is $455. For the 22.5 inch bike it is $490. The desired ending inventory for each month is 15% of the following months sales for the 21.5 inch bike and 12% for the 22.5 inch bike. The inventory at January 1 of the budget year is expected to be 55 units of the 21.5 inch bike and 38 units of the 22.5 inch bike. The projected sales for Jan of the year following the budget are 385 of the 21.5 inch bike and 350 for the 22.5 inch bike.

The total materials for the 21.5 inch bike and 22.5 inch bike are $164.45 and $186.30 respectively (Bill of Materials in workbook for information purposes).

The production department would like to have an ending raw materials inventory of 20% of the next months production requirements. Desired ending production inventory for December is $15,700 for 21.5 inch bike and $15,300 for 22.5 inch bike. Beginning raw materials inventory value for Jan of the budget year are $16,370 for the 21.5 inch bike and $18,597 for the 22.5 inch bike.

Direct labor is 3.9 hours at $15.25 per hour for the 21.5 inch bike and 4.4 hours at $15.25 per hour for the 22.5 inch bike (Process sheet in workbook for information purposes).

Manufacturing Overhead is based on direct labor hours at a rate of $22.25 per DLH for each of the bikes.

Budgeted monthly fixed overhead is as follows:

Salaries	$ 5,000
Utilities	2,200
Depreciation	7,200
Maintenance	2,800
Insurance	2,000
Property Taxes	1,200

Sales, General and Administrative (SG&A) expenses are based on unit sales for variable expenses at $11.20 per unit. Fixed SG&A expenses are $18,000 per month. Part of these SG&A expenses are non-cash and amount to $7,800 per month.

Cash is expected to be collected at 55% of the prior month sales and 45% of the sales from 2 months prior. Nov/Dec sales for the prior year are $422,000 and $475,000 respectively.

Monthly cash disbursements for materials are 50% of current months purchases and 50% of last months purchases. Trade accounts payable should be based on materials purchases and the balance at Dec 31 of the year prior to the budget year is estimated to be $42,000.

Assume all other accruals are paid in the month incurred.

The beginning cash balance for Jan of the budget year is estimated to be $75,000.

The company has estimated balance sheet amounts as of Jan 1 of $225,000 for Land, $1,280,000 for Property, Plant & Equipment, $2,125,000 for Common Stock and Retained Earnings of $510,915.

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