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You are the new accountant at Beautiful Bikes Ltd$.$

The previous accountant went on vacation leave and never returned so the finance manager was helping with these responsibilities in addition to his other roles.

It is difficult for the manager to be functioning in two roles, so not surprisingly, many tasks have fallen behind, including the budget which must be presented and approved by the end of the month.

Your manager is very happy that you have started in the position so that he can now take some time off to visit his mother in the Phillipines who is very ill.

Budgeting was the favourite part of your college course so you feel really confident about getting everything up to date.

Your first task is to prepare the budget on your own. Additionally, your manager was kind enough to provide you with some information to assist with the budget preparation process.

You will prepare each individual detailed budget as well as the master budget. Sales Budget:

The selling price per unit is $$6\mathrm{.}00$ per unit.

The Total Sale Units Budgeted for the year $($January to December$)$ is $200,000$ units.

The $200,000$ units must be allocated monthly based on trend over the last three years.

The trend would show which months should have higher or lower number of units.

Production Budget:

The management prefers to maintain $10$ percent of next month$$s sales in ending inventory.

Beginning inventory $=$ Inventory at end of previous month; for example, February's beginning inventory $=$ January's ending inventory.

Cost of Goods Sold:

The cost of goods per unit is $$3\mathrm{.}50$ per unit.

Administration Budget:

Salary for January to June is $$5,000$ monthly, but will increase to $$6,000$ beginning July $1$st$.$

Rent is $$24,000$ per annum.

Cash Budget:

All sales are on account.

Beautiful Bike$$s collection pattern is:

$70\%$ collected in the month of sale

$25\%$ collected in the month following sale

$5\%$ is uncollectible

The December $31$ accounts receivable balance is $$20,000.$

Required:

$1.$ Create the individual detailed budgets from January $1$ to December $31$ for:

Sales

Production

Cost of Goods Sold

Administration

Cash

$2.$ Now prepare the master budget using the information from the individual budgets for January $1$ to December $31.$

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