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# 10-27 Milo Company manufactures beach umbrellas. The company is prepa quarter and has assembled the following information to assist in the budget preparation: a.

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# 10-27 Milo Company manufactures beach umbrellas. The company is prepa 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): ring detailed budgets for the third July August September...50,000 October 30,000 20,000 10,000 November...10,000 70,000 The selling price of the beach umbrellas is $12 per unit. b. All sales are on account. Based on past experience, sales are collected in the following pattern: 30% in the month of sale 65% in the month following sale 5% uncollectible Sales for June totaled $300,000 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. c. 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 the beginning and end of the quarter will be: June 30 72,000 feet ? feet 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 I for pur- chases of Gilden during June will be $76,000. e. Required: I. 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

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