Soprano Co. is in the process of preparing the second quarter budget for 2010, and the following

Question:

Soprano Co. is in the process of preparing the second quarter budget for 2010, and the following data have been assembled:

â€¢ The company sells a single product at a selling price of $40 per unit. The estimated sales volume for the next six months is as follows:

â€¢ All sales are on account. The company's collection experience has been that 40% of a month's sales are collected in the month of sale, 55% are collected in the month following the sale, and 5% are uncollectible. It is expected that the net realizable value of accounts receivable (i.e., accounts receivable less allowance for uncollectible accounts) will be $132,000 on March 31,
2010.
â€¢ Management's policy is to maintain ending finished goods inventory each month at a level equal to 50% of the next month's budgeted sales. The finished goods inventory on March 31, 2010, is expected to be 3,500 units.
â€¢ To make one unit of finished product, 3 pounds of materials are required. Management's policy is to have enough materials on hand at the end of each month to equal 40% of the next month's estimated usage. The raw materials inventory is expected to be 10,200 pounds on March 31, 2010.
â€¢ The cost per pound of raw material is $6.00, and 80% of all purchases are paid for in the month of purchase; the remainder is paid in the following month. The accounts payable balance for raw material purchases is expected to be $26,280 on March 31, 2010.
Required:
a. Prepare a sales budget in units and dollars, by month and in total, for the second quarter (April, May, and June) of 2010.
b. Prepare a schedule of cash collections from sales, by month and in total, for the second quarter of 2010.
c. Prepare a production budget in units, by month and in total, for the second quarter of 2010.
d. Prepare a materials purchases budget in pounds, by month and in total, for the second quarter of 2010.
e. Prepare a schedule of cash payments for materials, by month and in total, for the second quarter of2010.

Accounts Payable
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive... Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...