2. Prepare a production budget for each of the months July through October. Water Sport Inc. manufactures a small personal water tube used for children learning to swim. Management is now preparing detailed budgets for the third quarter, July through September, and has assembled the following Information to assist: Production budget a. The Marketing Department has estimated sales as follows for the remainder of the year (number of water tubes): July August September October Budgeted sales (units) July 7,600 October 4,000 Add: Desired ending inventory August 5,100 November 3,60 September 5,100 December 3,106 Total needs 0 0 Less: Beginning inventory 0 The selling price of the water tubes is $60. Required production (units) 0 b. All sales are on account. Based on past experience. sales are expected to be collected in the following pattern: in the month of sale 45% in the month following sale 5X uncollectible The beginning accounts receivable balance (excluding uncollectible amounts) on July 1 will be $165.500. . The company maintains finished goods Inventories equal to 20% of the following month's sales. The Inventory of finished goods on July 1 will be 1,520 units. d. Each water tube requires 3 kilograms of synthetic polyisoprene rubber compound. To prevent shortages. the company would like the Inventory of synthetic rubber compound on hand at the end of each month to be equal to 20% of the following month's 3. Prepare a direct materials purchases budget for synthetic rubber compound, by month and in total, for the third quarter. Also production needs. The Inventory of synthetic rubber compound on hand on July 1 will be 4.380 kilograms. prepare a schedule of expected cash disbursements for synthetic rubber compound, by month and in total, for the third quarter. e. The synthetic rubber compound costs $4.00 per kilogram. Water Sport pays for 70% of its purchases In the month of purchase: the remainder is paid for in the following month. The accounts payable balance for synthetic rubber compound purchases will be $14,700 on July 1. Direct materials purchases budget July August September Quarter Required: Required production (units) 1. Prepare a sales budget, by month and In total. for the third quarter. (Show your budget In both units of water tubes and dollars.) Also Material D238 needed per unit (kgs. prepare a schedule of expected cash collections, by month and In total, for the third quarter. Production needs (kgs.) Add: Desired ending inventory (kgs.) Sales budget Total Material D238 needs 0 0 0 July August September Quarter Budgeted sales (units) Less: Beginning inventory (kgs.) Selling price per unit Raw materials to be purchased 0 Total budgeted sales Cost of raw materials to be purchased at $4.00 per kg Schedule of expected cash collections Schedule of expected cash disbursement July August September Quarter July August September Quarter Accounts receivable, beginning balance July sales: Accounts payable, beginning balance August sales: July purchases September sales: August purchases: Total cash collections 0 September purchases: Total cash disbursements OS 0 S