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The company needs to maintain a minimum caah balance at the end of every month in the arrount of $15.000. The Bots are forecasted to sell at $37 esch. Recent actual and projected sales (in units) are as follows In order to meet the product demand, the cormpany has estatished a policy recuiring that ending imventery for each month must be equal to 90\% of the units expected to sold in the next month. The cost to purchase each unit of product is $22. Purchases are typically paid for as follows: 50% paid in the month of purchase, and the remaining soto paid in the month atter purchase. Al sales are on credt. with no discount, and payable within 15 days. The compary's collections on account usualy are 25% in the month of saie, 500 in the month immediatoly after the sale, and 25% in the second month afor sole. The company has a very ngorous credil policy and there are virtually no bad debts. The comparyys operaing expenses are showe below: All operating werenses are paid during the month, in cash, with the ewception of depreciasion and insurance empired. Niw fixed assets will be purchased during May for $30.000. The company declares dividends of 516.000 each quarter, payable in the first month of the following quarter. "Accounts receivable consists of 5629000 from February sales and $2,220,000 from March Sales. Use these numbers for both scenarios. "* Use this same March ending inventery number for beth scenarios. The compary has a good celabonship with its bark and can boerow money at a 10% annual rate at any time and in any anount. All borsowing and repayments must bet made at the end of the month. When the company is ready to make a payment, all urpaid interest must be paid frst. After the unpaid interest is paid, then principal can be repaid as long as the minimum cash balance is maintained. Required: You will complete all tasks listed below for the original facts above...this will be Scenario 1. Then you will repeat the entire process for Scenario 2. This second scenario will show what would happen if there was an increase of 20% (twenty percent) in the number of units sold. This is essentially a flexible budget. SCENARIO 1 Prepare a Master Budget for the three month period ending June 30 th. Include the following detailed budgets: 1. a. A sales budget by month and in total. b. A schedule of budgeted cash collections from sales and accounts receivable by month and in total. c. A purchases budget in units and dollars by month and in total. d. A schedule of budgeted cash payments for purchases by month and in total. 2. A cash budget by month and in total. 3. A budgeted income statement for the three-month period ending June 30 . Use the contribution margin approach. 4. A budgeted balance sheet as of June 30 . 5. Calculate the Contribution Margin and Break-Even amounts (for the three month period) based on your assumptions about variable and fixed costs. SCENARIO 2 Repeat all the steps (1-5) shown above assuming that the number of units expected to be sold increase by 20%. The months January to March have already occurred so those will be the same for both Scenarios. Please pay attention to the information above when it says: "Accounts receivable consists of $629,000 from February sales and $2,220,000 from March Sales. Use these numbers for both scenarios. * Use this same March ending inventory number for both scenarios. Budgeted Ending Inventory for June is based on July sales. Therefore you will need to increase the expected July sales in Scenario 2 and this will mean June Ending Inventory will be different in Scenario 2. Here are some check figures to check your final work. If you agree with these check numbers it is an important confirmation, although it is not guarantee that everything is correct

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