EXERCISE 8-1 Schedule of Expected Cash Collections LO8-2 Silver Company makes a product that is very popular as a Mother's Day gift. Thus, peak sales occur in May of each year, as shown in the company's sales budget for the second quarter given below: April May June Total Budgeted sales (all on account) $300,000 $500,000 $200,000 $1,000,000 From past experience, the company has learned that 20% of a month's sales are collected in the month of sale, another 70% are collected in the month following sale, and the remaining 10% are collected in the second month following sale. Bad debts are negligible and can be ignored. February sales totaled $230,000, and March sales totaled $260,000. Required: 1. Using Schedule 1 as your guide, prepare a schedule of expected cash collections from sales, by month and in total, for the second quarter. 2. What is the accounts receivable balance on June 30th?EXERCISE 8-2 Production Budget LOB-3 Down Under Product, Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows: The company is now in the process of preparing a production budget for the second quarter. Past experi- ence has shown that end-of-month inventory levels must equal 10% of the following month's unit sales. The inventory at the end of March was 5.000 units. Required: Using Schedule 2 as your guide, prepare a production budget by month and in total, for the second quarter. EXERCISE 8-3 Direct Materials Budget LO8-4 Three grams of musk oil are required for each bottle of Mink Caress, a very popular perfume made by a small company in western Siberia. The cost of the musk oil is $1.50 per gram. Budgeted production of Mink Caress is given below by quarters for Year 2 and for the first quarter of Year 3: Year 2 Year 3 First Second Third Fourth First Budgeted production, in bottles...... . ..... 60,000 90,000 150,000 100,000 70,000 Chapter 8 Musk oil has become so popular as a perfume ingredient that it has become necessary to carry large inventories as a precaution against stock-outs. For this reason, the inventory of musk oil at the end of a quarter must be equal to 20% of the following quarter's production needs. Some 36,000 grams of musk oil will be on hand to start the first quarter of Year 2. Required: Using Schedule 3 as your guide, prepare a direct materials budget for musk oil, by quarter and in total, for Year 2