Groundhog Inc. manufactures a small tents specifically for children. Management is now preparing detailed budgets for the third quarter, July through September, and has assembled the following information to assist: a. The Marketing Department has estimated sales as follows for the remainder of the year (number of tents): July August September 8,400 October 6,900 November 5,900 December 4,800 4,400 3,900 The selling price of the tents are $50. b. All sales are on account. Based on past experience, sales are expected to be collected in the following pattern: 50% in the month of sale 45% in the month following sale 5% uncollectible The beginning accounts receivable balance (excluding uncollectible amounts) on July 1 will be $169,500. c. 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 1,680 units. d. Each tent requires 4 kilograms of synthetic nylon. To prevent shortages, the company would like the inventory of synthetic nylon on hand at the end of each month to be equal to 20% of the following month's production needs. The inventory of synthetic nylon on hand on July 1 will be 6,480 kilograms. e. The synthetic nylon costs $2.50 per kilogram. Groundhog 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 nylon purchases will be $17,100 on July 1. Required: 1. Prepare a production budget for each of the months July through October. Production budget July August September October Budgeted sales (units) Total needs Required production (units) 2. Prepare a direct materials purchases budget for synthetic nylon, by month and in total, for the third quarter. Also prepare a schedule of expected cash disbursements for the synthetic nylon, by month and in total, for the third quarter. Direct materials purchases budget July August September Quarter Required production (units) Material D236 needed per unit (kgs.) Production needs (kgs.) Total Material D236 needs Raw materials to be purchased Cost of raw materials to be purchased at $2.50 per kg Quarter Schedule of expected cash disbursement July August September Accounts payable, beginning balance July purchases: August purchases: September purchases: Total cash disbursements