Budget Corporation has the following budgeted sales for the next six-month period:

Month Unit Sales

September 60,000

October 80,000

November 140,000

December 100,000

January 120,000

February 80,000

There were 30,000 units of finished goods in inventory at the beginning of September. Plans are to have an inventory of finished products that equal 20 percent of the unit sales for the next month.

Five kilograms of materials are required for each unit produced. Each kilogram of material costs $10. Inventory levels for materials are equal to 30 percent of the needs for the next month. Materials inventory on September 1 was 10,000 kilograms. Budget pays 70% of purchases in the month of purchase 25% in the following month, and 5% in the second month after purchase.

Each unit is sold for $200. Experience reveals 35% of sales are collected in month of sales, 50% one month after sale, and 17% collected in the second month after sale. The remaining are uncollectible. Customers are offered a 2% discount if payment occurs in the month of sale. Accounts receivable on September 1 is $12,000 (determine the amount to be collected in September and October and amount uncollectible).

Each unit purchased cost $95.

1. Prepare production budgets in units for October, November, and December.

Include total column

2. Prepare a purchases budget in kilograms for October, November, and December. Include total column.

c. Prepare cash collection budget. Determine balance in accounts receivable.

d. Prepare cash payment budget. Determine balance in accounts payable.