Budgeting in a Manufacturing Firm The following information is available for the Call Company:

Additional information:

a. Seventy-five percent of a month’s sales is collected by the month’s end; the remaining 25% is collected in the following month.

b. Sixty percent of a month’s purchases is paid by the month’s end; the remaining 40%
is paid in the following month.

c. The desired ending finished goods inventory every month is 25% of the next month’s sales.

d. The desired ending direct materials inventory every month is 20% of the next month’s production needs.
Required:
1. Prepare the sales budget, including cash collections, for June, July, and August (in dollars).
2. Prepare the production budget for June, July, and August (in units).
3. Prepare the direct materials budget, including cash payments, for June, July, and August (in dollars).
4. Prepare the direct labor budget for June, July, and August (in dollars).

Transcribed Image Text:

Expected sales (units): June July August Selling price per unit Accounts receivable balance, June 1 Accounts payable balance, June 1 Desired finished goods inventory, August 31 (units) Beginning finished goods inventory, June 1 (units) Direct materials needed per unit Desired direct materials inventory, August 31 Beginning direct materials inventory, June 1 Total direct labor time per finished unit Direct materials cost per pound Direct labor cost per hour 840 980 1,400 $15 $6,300 $2,350 250 270 11 lbs. 2,800 lbs. 2,700 lbs. 3 hours $0.60 $8