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Sales and Marketing

Glow products are sold to retailers for $$50$ each, and the sales have been in demand due to Covid$-19.$

However, the marketing department has been conservative toward the end of the year due to market

saturation. The marketing department has just sent you their forecasted quarter sales and marketing

budget.

Quarter $2023$ Q$12023$ Q$22023$ Q$32023$ Q$42024$ Q$12024$ Q$2$

Sales in Unit $25,00026,00025,00025,00027,00026,000$

Advertising $$25,000$ $$25,000$ $$25,000$ $$25,000$ $$25,000$ $$25,000$

Production and Inventory

Ending finished goods inventories should equal $20\%$ of the next quarter's unit sales. Glow currently

does its assembly production in$-$house. Each unit consists of $3$ LED panels, and the cost of each is $$5.$

Each unit needs one labour hour from assembly to finish package. The hourly pay rate for the

assembling workers is $$20$ per hour.

The production manager also required the desired direct material ending inventory to $20\%$ of the next

quarter's production.

Product and Period Costs

Below is a display of the Glow division quarterly manufacture overhead and selling and

administrative expenses:

Manufacture Overhead Variable:

Indirect labour $$3$ per labour hour

Indirect Materials $$2$ per labour hour

Fixed:

Wages and Salaries $$5,000$

Utilities $$3,000$

Maintenance $$3,000$

Insurance $$5,000$

Depreciation $$5,000$

Rent $$12,000$

Selling and Administrative

Variable:

Sales Commissions $$2$ per unit

Fixed $($quarterly$)$:

Wages and Salaries $$100,000$

Utilities $$15,000$

Insurance $$5,000$

Depreciation $$5,000$

Miscellaneous $$8,000$

Cash, Accounts Receivable and Accounts Payable

The company desires a minimum ending cash balance each quarter of $$250,000.$ All sales to the

distributors are made on credit terms with no discount $($for now$)$ and payable within $45$ days. The Glow

has determined that only $50\%$ of sales are collected by the end of the quarter in which the sale

occurred. The rest $50\%$ is collected in the quarter following the sale.

Purchases are paid for in the following manner: $50\%$ in the quarter of the purchase and the remaining

$50\%$ paid in the quarter following the purchase.

Additional Information

Labour, manufacturing overhead, and Selling and Administrative expenses are all paid

during the month, in cash, except depreciation $($of course$).$ Glow will make

a warehouse purchase during the second quarter of $2022$ for $$250,000$ cash. Glow's

balance sheet at the end of the fourth quarter last year is shown below:

Assets

Cash $$250,000$

Accounts receivable $$200,000($uncollected from Q$4$ last year$)$

Liabilities

Accounts payable $$180,000($unpaid from Q$4$ last year$)$

An agreement with Bank of the West allows Glow to borrow up to a total loan amount of

$$500,000($maximum amount$).$ The interest rate on these loans is $12\%$ annually

Required:

Prepare a master budget for $2024.$ Include the following budget schedules and financial statements as if

there is no income tax $1)$ Master Budget $2)$ Cash Budget. Show the cash budget by quarter. $3)$ Budgeted

Income statement by quarter and annual

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