Milo Company manufactures beach umbrellas. The company ispreparing detailed budgets for the third quarter and has assembledthe following information to assist in the budget preparation:
a.
The Marketing Department has estimated sales as follows for theremainder of the year (in units):
The selling price of the beach umbrellas is $15 per unit.
July
33,000
October
23,000
August
76,000
November
9,500
September
45,000
December
10,000
b.
All sales are on account. Based on past experience, sales arecollected in the following pattern:
30%
in the month of sale
65%
in the month following sale
5%
uncollectible
Sales for June totaled $375,000.
c.
The company maintains finished goods inventories equal to 15% ofthe following monthâs sales. This requirement will be met at theend of June.
d.
Each beach umbrella requires 4 feet of Gilden, a material thatis sometimes hard to acquire. Therefore, the company requires thatthe ending inventory of Gilden be equal to 50% of the followingmonthâs production needs. The inventory of Gilden on hand at thebeginning and end of the quarter will be:
June 30
78,900
feet
September 30
?
feet
e.
Gilden costs $0.60 per foot. One-half of a monthâs purchases ofGilden is paid for in the month of purchase; the remainder is paidfor in the following month. The accounts payable on July 1 forpurchases of Gilden during June will be $39,390.
Required:
1-a.
Prepare a sales budget, by month and in total, for the thirdquarter.
1-b.
Prepare a schedule of expected cash collections, by month and intotal, for the third quarter.
2.
Prepare a production budget for each of the monthsJulyâOctober.
3-a.
Prepare a direct materials budget for Gilden,, by month and intotal, for the third quarter. (Round your Unit cost of rawmaterials to 2 decimal places.)
3-b.
Prepare a schedule of expected cash disbursements for Gilden,,by month and in total, for the third quarter.
Milo Company manufactures beach umbrellas. The company ispreparing detailed budgets for the third quarter and has assembledthe following information to assist in the budget preparation: a.The Marketing Department has estimated sales as follows for theremainder of the year (in units): The selling price of the beachumbrellas is $15 per unit. July 33,000 October 23,000 August 76,000November 9,500 September 45,000 December 10,000________________________________________ b. All sales are onaccount. Based on past experience, sales are collected in thefollowing pattern: 30% in the month of sale 65% in the monthfollowing sale 5% uncollectible________________________________________ Sales for June totaled$375,000. c. The company maintains finished goods inventories equalto 15% of the following monthâs sales. This requirement will be metat the end of June. d. Each beach umbrella requires 4 feet ofGilden, a material that is sometimes hard to acquire. Therefore,the company requires that the ending inventory of Gilden be equalto 50% of the following monthâs production needs. The inventory ofGilden on hand at the beginning and end of the quarter will be:June 30 78,900 feet September 30 ? feet________________________________________ e. Gilden costs $0.60 perfoot. One-half of a monthâs purchases of Gilden is paid for in themonth of purchase; the remainder is paid for in the followingmonth. The accounts payable on July 1 for purchases of Gildenduring June will be $39,390. Required: 1-a. Prepare a sales budget,by month and in total, for the third quarter. 1-b. Prepare aschedule of expected cash collections, by month and in total, forthe third quarter. 2. Prepare a production budget for each of themonths JulyâOctober. 3-a. Prepare a direct materials budget forGilden,, by month and in total, for the third quarter. (Round yourUnit cost of raw materials to 2 decimal places.) 3-b. Prepare aschedule of expected cash disbursements for Gilden,, by month andin total, for the third quarter.
Milo Company manufactures beach umbrellas. The company ispreparing detailed budgets for the third quarter and has assembledthe following information to assist in the budget preparation:
a.
The Marketing Department has estimated sales as follows for theremainder of the year (in units):
The selling price of the beach umbrellas is $15 per unit.
July
33,000
October
23,000
August
76,000
November
9,500
September
45,000
December
10,000
b.
All sales are on account. Based on past experience, sales arecollected in the following pattern:
30%
in the month of sale
65%
in the month following sale
5%
uncollectible
Sales for June totaled $375,000.
c.
The company maintains finished goods inventories equal to 15% ofthe following monthâs sales. This requirement will be met at theend of June.
d.
Each beach umbrella requires 4 feet of Gilden, a material thatis sometimes hard to acquire. Therefore, the company requires thatthe ending inventory of Gilden be equal to 50% of the followingmonthâs production needs. The inventory of Gilden on hand at thebeginning and end of the quarter will be:
June 30
78,900
feet
September 30
?
feet
e.
Gilden costs $0.60 per foot. One-half of a monthâs purchases ofGilden is paid for in the month of purchase; the remainder is paidfor in the following month. The accounts payable on July 1 forpurchases of Gilden during June will be $39,390.
Required:
1-a.
Prepare a sales budget, by month and in total, for the thirdquarter.
1-b.
Prepare a schedule of expected cash collections, by month and intotal, for the third quarter.
2.
Prepare a production budget for each of the monthsJulyâOctober.
3-a.
Prepare a direct materials budget for Gilden,, by month and intotal, for the third quarter. (Round your Unit cost of rawmaterials to 2 decimal places.)
3-b.
Prepare a schedule of expected cash disbursements for Gilden,,by month and in total, for the third quarter.
Milo Company manufactures beach umbrellas. The company ispreparing detailed budgets for the third quarter and has assembledthe following information to assist in the budget preparation: a.The Marketing Department has estimated sales as follows for theremainder of the year (in units): The selling price of the beachumbrellas is $15 per unit. July 33,000 October 23,000 August 76,000November 9,500 September 45,000 December 10,000________________________________________ b. All sales are onaccount. Based on past experience, sales are collected in thefollowing pattern: 30% in the month of sale 65% in the monthfollowing sale 5% uncollectible________________________________________ Sales for June totaled$375,000. c. The company maintains finished goods inventories equalto 15% of the following monthâs sales. This requirement will be metat the end of June. d. Each beach umbrella requires 4 feet ofGilden, a material that is sometimes hard to acquire. Therefore,the company requires that the ending inventory of Gilden be equalto 50% of the following monthâs production needs. The inventory ofGilden on hand at the beginning and end of the quarter will be:June 30 78,900 feet September 30 ? feet________________________________________ e. Gilden costs $0.60 perfoot. One-half of a monthâs purchases of Gilden is paid for in themonth of purchase; the remainder is paid for in the followingmonth. The accounts payable on July 1 for purchases of Gildenduring June will be $39,390. Required: 1-a. Prepare a sales budget,by month and in total, for the third quarter. 1-b. Prepare aschedule of expected cash collections, by month and in total, forthe third quarter. 2. Prepare a production budget for each of themonths JulyâOctober. 3-a. Prepare a direct materials budget forGilden,, by month and in total, for the third quarter. (Round yourUnit cost of raw materials to 2 decimal places.) 3-b. Prepare aschedule of expected cash disbursements for Gilden,, by month andin total, for the third quarter.
Related questions
| Good evening, Your timely asstance on this problem is greatlyapprecieated. Crydon, Inc., manufactures an advanced swim fin for scubadivers. Management is now preparing detailed budgets for the thirdquarter, July through September, and has assembled the followinginformation to assist in preparing the budget: |
| a. | The Marketing Department hasestimated sales as follows for the remainder of the year (in pairsof swim fins): |
| The selling price of the swimfins is $10 per pair. |
| July | 5,100 | October | 3,100 |
| August | 6,100 | November | 2,100 |
| September | 4,100 | December | 2,100 |
| b. | All sales are on account. Basedon past experience, sales are expected to be collected in thefollowing pattern: |
| 43% | in the month ofsale |
| 48% | in the monthfollowing sale |
| 9% | uncollectible |
| The beginning accountsreceivable balance (excluding uncollectible amounts) on July 1 willbe $132,000. |
| c. | The company maintains finished goods inventories equal to 9% ofthe following monthâs sales. The inventory of finished goods onJuly 1 will be 459 pairs. |
| d. | Each pair of swim fins requires 3 pounds of geico compound. Toprevent shortages, the company would like the inventory of geicocompound on hand at the end of each month to be equal to 20% of thefollowing monthâs production needs. The inventory of geico compoundon hand on July 1 will be 3,114 pounds. |
| e. | Geico compound costs $2.50 per pound. Crydon pays for 57% of itspurchases in the month of purchase; the remainder is paid for inthe following month. The accounts payable balance for geicocompound purchases will be $11,300 on July 1. |
Garden Sales, Inc., sells garden supplies. Management isplanning its cash needs for the second quarter. The company usuallyhas to borrow money during this quarter to support peak sales oflawn care equipment, which occur during May. The followinginformation has been assembled to assist in preparing a cash budgetfor the quarter: |
| a. | Budgeted monthly absorptioncosting income statements for AprilâJuly are: |
| April | May | June | July | |||||
| Sales | $ | 450,000 | $ | 980,000 | $ | 430,000 | $ | 330,000 |
| Cost of goodssold | 315,000 | 686,000 | 301,000 | 231,000 | ||||
| Gross margin | 135,000 | 294,000 | 129,000 | 99,000 | ||||
| Selling andadministrative expenses: | ||||||||
| Selling expense | 87,000 | 93,000 | 54,000 | 33,000 | ||||
| Administrativeexpense* | 41,500 | 55,200 | 33,800 | 31,000 | ||||
| Total selling andadministrative expenses | 128,500 | 148,200 | 87,800 | 64,000 | ||||
| Net operatingincome | $ | 6,500 | $ | 145,800 | $ | 41,200 | $ | 35,000 |
| *Includes $15,000 ofdepreciation each month. |
| b. | Sales are 20% for cash and 80%on account. |
| c. | Sales on account are collected over a three-month period with10% collected in the month of sale; 70% collected in the firstmonth following the month of sale; and the remaining 20% collectedin the second month following the month of sale. Februaryâs salestotaled $155,000, and Marchâs sales totaled $215,000. |
| d. | Inventory purchases are paid for within 15 days. Therefore, 50%of a monthâs inventory purchases are paid for in the month ofpurchase. The remaining 50% is paid in the following month.Accounts payable at March 31 for inventory purchases during Marchtotal $91,700. |
| e. | Each monthâs ending inventory must equal 20% of the cost of themerchandise to be sold in the following month. The merchandiseinventory at March 31 is $63,000. |
| f. | Dividends of $23,000 will bedeclared and paid in April. |
| g. | Land costing $31,000 will bepurchased for cash in May. |
| h. | The cash balance at March 31 is $45,000; the company mustmaintain a cash balance of atleast $40,000 at the end of eachmonth. |
| i. | The company has an agreement with a local bank that allows thecompany to borrow in increments of $1,000 at the beginning of eachmonth, up to a total loan balance of $200,000. The interest rate onthese loans is 1% per month and for simplicity we will assume thatinterest is not compounded. The company would, as far as it isable, repay the loan plus accumulated interest at the end of thequarter. |
The companyâs president is interested in knowing how reducinginventory levels and collecting accounts receivable sooner willimpact the cash budget. He revises the cash collection and endinginventory assumptions as follows: |
| 1. | Sales continue to be 20% for cash and 80% on credit. However,credit sales from April, May, and June are collected over athree-month period with 25% collected in the month of sale, 65%collected in the month following sale, and 10% in the second monthfollowing sale. Credit sales from February and March are collectedduring the second quarter using the collection percentagesspecified in the main section. |
| 2. | The company maintains its ending inventory levels for April,May, and June at 15% of the cost of merchandise to be sold in thefollowing month. The merchandise inventory at March 31 remains$47,250 and accounts payable for inventory purchases at March 31remains $91,700. |
| Required: | |
| 1. | Using the presidentâs new assumptions in (1) above, prepare aschedule of expected cash collections for April, May, and June andfor the quarter in total. |
| 2. | Using the presidentâs new assumptions in (2) above, prepare thefollowing for merchandise inventory: |
| a. | A merchandise purchases budget for April, May, and June. |
| b. | A schedule of expected cash disbursements for merchandisepurchases for April, May, and June and for the quarter intotal. |
| 3. | Using the presidentâs new assumptions, prepare a cash budget forApril, May, and June, and |
