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Crydon, Inc., manufactures an advanced swim fin for scuba divers. Management is now preparing detailed budgets for the third quarter, July through September, and has assembled the following information to assist in preparing the budget:
a.
The Marketing Department has estimated sales as follows for the remainder of the year (in pairs of swim fins):
The selling price of the swim fins is $11 per pair.
July
5,100
October
3,100
August
6,100
November
2,100
September
4,100
December
b.
All sales are on account. Based on past experience, sales are expected to be collected in the following pattern:
43%
in the month of sale
47%
in the month following sale
10%
uncollectible
The beginning accounts receivable balance (excluding uncollectible amounts) on July 1 will be $138,000.
c.
The company maintains finished goods inventories equal to 10% of the following month's sales. The inventory of finished goods on July 1 will be 510 pairs.
d.
Each pair of swim fins requires 2 pounds of geico compound. To prevent shortages, the company would like the inventory of geico compound on hand at the end of each month to be equal to 20% of the following month's production needs. The inventory of geico compound on hand on July 1 will be 2,080 pounds.
e. Geico compound costs $3.00 per pound. Crydon pays for 55% of its purchases in the month of purchase; the remainder is paid for in the following month. The accounts payable balance for geico compound purchases will be $10,900 on July 1.
Required:
1a: Prepare a sales budget, by month and in total, for the third quarter.
Quarter - Total
Total budgeted sales
$
1b.
Prepare a schedule of expected cash collections, by month and in total, for the third quarter. (Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations.)
Schedule of Expected Cash Collections
Accounts receivable, beginning balance
July sales
August sales
September sales
Total cash collections
July August September October
2.
Prepare a production budget for each of the months July through October.
(Input all amounts as positive values.)
Production Budget
Augus
Budgeted sales (pairs)
:
Total needs
Required production (pairs)
3a.
Prepare a direct materials budget for geico compound, by month and in total, for the third quarter.(Do not round intermediate calculations. Round your answers to the nearest dollar amount. Input all amounts as positive values.)
Direct Materials Budget
Production needs (lbs.)
Raw materials to be purchased
Cost of raw materials to be purchased
3b.
Prepare a schedule of expected cash disbursements for geico compound, by month and in total, for the third quarter. (Do not round intermediate calculations. Round your answers to the nearest dollar amount. Leave no cells blank - be certain to enter "0" wherever required.)
Schedule of Expected Cash Disbursements
Accounts payable, beginning balance
July purchases
August purchases
September purchases
Total cash payments
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