Bestco Company is a manufacturer and seller of specialty goods. Information on actual and projected sales in units is given below for the Use this information to answer all parts of question one.

Month Units

June 2017 (actual)30,000

July 2017 (budget)35,000

August 2017 (budget)50,000

September 2017 (budget)60,000

October 2017 (budget)65,000

November 2017 (budget)70,000

Required:

1. Prepare a sales budget in units and dirham for July, August and September. The selling price per unit is AED 18.

2. Assume that the company collects 55% of its sales in the month of the sale, 45% in the month following the sale. Prepare a Cash Receipts schedule for July, August and September. Accounts Receivable balance as of June 29 was 230,000 dh.

3. Refer to the projected sales that you have calculated. Prepare a Production Budget for July, August and September. The company’s inventory at the end of each month must equal 25% of next month’s sales. June 30 ending inventory was 11,000 units.

4. Prepare a Direct Materials Purchase Budget for July, August and September based on the production budget above. One unit of product requires 8 ounces of materials and the company’s policy is to maintain an ending inventory of materials equal to 25% of next month’s production needs. Each pound of direct materials cost 1.50 dh.

5. Assuming that the company’s policy is to pay 60% of each month’s cost of materials purchases in the same month and 40% in the month after, prepare a Cash Disbursement (cash payment) budget for July, August and September. The accounts payable balance at the end of June was AED 220,000 and is to be paid in full in July.