Reference no: EM132517055

Milo Company manufactures beach umbrellas. The company is preparing detailed budgets for the third quarter and has assembled the following information to assist in the budget preparation:

a. The Marketing Department has estimated sales as follows for the remainder of the year (in units):

July 38,500                     October 28,5000

August 87,000               November 15,000

September 56,000           December 15,500

• The selling price of the beach umbrellas is $14 per unit.

b. All sales are on account. Based on past experience, sales are collected in the following pattern:

30% in the month of sale

65% in the month following sale

5% uncollectible

• Sales for June totaled $504,000.

c. The company maintains finished goods inventories equal to 15% of the following month's sales. This requirement will be met at the end of June.

d. Each beach umbrella requires 4 feet of Gilden, a material that is sometimes hard to acquire. Therefore, the company requires that the ending inventory of Gilden be equal to 50% of the following month's production needs. The inventory of Gilden on hand at the beginning and end of the quarter will be:

June 30 91,550 feet

September 30 ? feet

e. Gilden costs $0.60 per foot. One-half of a month's purchases of Gilden is paid for in the month of purchase; the remainder is paid for in the following month. The accounts payable on July 1 for purchases of Gilden during June will be $49,290.

Require:

Question 1: Calculate the estimated quantity of beach umbrellas that need to be produced in July, August, September, and October.

Question 2: Calculate the quantity of Gilden (in feet) that needs to be purchased by month and in total, for the third quarter.

Question 3: Calculate the cost of the raw material (Gilden) purchases by month and in total, for the third quarter.

Question 4: Calculate the expected cash disbursements for raw material (Gilden) purchases, by month and in total, for the third quarter.