Unifying Concepts: Sales, Cash Collections, Production, Direct Materials, and Direct Labor Budgets The following information is available for Raleigh Company:

Additional information:

a. Each month 70% of sales are collected by month-end; the remaining 30% are collected in the following month.

b. The desired finished goods inventory every month is 20% of the next month’s sales.

c. The desired direct materials inventory every month is 10% of the next month’s production needs.

d. Each month 80% of direct materials purchases are paid by month-end; the remaining 20%
are paid in the following month.
Required:
1. Prepare sales budgets for April, May, and June (in dollars).

2. Prepare cash collection budgets for April, May, and June (in dollars). Assume that all sales are on credit.
3. Prepare production budgets for April, May, and June (in units).
4. Prepare direct materials budgets for April, May, and June (in dollars).
5. Prepare direct labor budgets for April, May, and June (in dollars).

Transcribed Image Text:

Expected sales volume: April May June Selling price per unit Accounts receivable balance, April 1 Accounts payable balance, April 1 Desired finished goods inventory, June 30 Beginning finished goods inventory, April 1 Direct materials needed per unit Desired direct materials inventory, June 30. Beginning direct materials inventory, April 1 Total direct labor time per finished product Direct materials cost per pound Direct labor cost per hour 1,600 units 1,500 units 1,750 units $12 $6,000 $796 200 units 210 units 5 pounds 550 pounds 420 pounds 2 hours $0.50 $8