Prepare a sales budget by month

Assignment Help Managerial Accounting

Reference no: EM13165540

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).

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(b)All sales are on account. Based on past experience, sales are collected in the following pattern:
30% in the month of sales
65% in the month following sales
5% uncollectible
Sales for June totaled $300,000.
(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 beginning and end of the quarter will be:

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(e)Gilden costs $0.80 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 $76,000.
Required:

1.Prepare a sales budget, by month and in total, for the third quarter. (Show your budget in both units and dollars.) Also prepare a schedule of expected cash collections, by month and in total, for the third quarter.

2. Prepare a production budget for each of the months July-October.

3. Prepare a direct materials budget for Gilden, by month and in total, for the third quarter. Also prepare a schedule of expected cash disbursements for Gilden, by month and in total, for the third quarter.

Reference no: EM13165540

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