Hawkins Engineering$$s management wants to prepare budgets for one of its products, GalaxyRS, for July $2019.$ The firm sells the product for $$80$ per unit and has the following expected sales $($in units$)$ for these months in $2019$:

April May June July August September

$6,0004,0005,6006,5006,8007,800$

Typically, cash sales for Hawkins represent $20\%$ of sales while credit sales represent $80\%.$ Hawkins bills customers on the first day of the month following the month of sale. Experience has shown that $85\%$ of the company$$s billings will be collected during the month of sale, $10\%$ by the end of the month after the sale, and $5\%$ will ultimately be uncollectible.

The production process requires the following:

Standard Costs:

Galaxy$-804$ lbs$.$ $$1\mathrm{.}25/$lb$.$

RS$-3602$ lbs$.$ $$5\mathrm{.}00/$lb$.$

Direct labor

Skill level $10\mathrm{.}01$ hours $$50/$hour

Skill level $20\mathrm{.}10$ hours $$20/$hour

Variable manufacturing overhead is budgeted at $$1,200$ per batch $($of $100$ units$)$ plus $$80$ per direct labor hour. In addition to variable overhead, the firm has a monthly fixed factory overhead of $$60,000,$ of which $$25,000$ is depreciation expense. The firm pays all manufacturing labor and factory overhead when incurred. The firm$$s policy is to maintain an ending finished goods inventory each month equal to $10\%$ of the following month$$s budgeted sales, but in no case less than $500$ units. All materials inventories are to be maintained at $5\%$ of the production needs for the next month, but not to exceed $1,000$ pounds. The firm expects all inventories at the end of June to be within the guidelines.

The purchase terms for materials are $3/10,$ n$/30.$ Hawkings makes all payments within the discount period. Experience has shown that $80\%$ of the purchases are paid in the month of the purchase and the remainder are paid in the month immediately following. In June $2019,$ the firm budgeted purchases of $$30,000$ for Galaxy$-80$ and $$20,000$ for RS$-360.$

Total budgeted marketing, distribution, customer service and administrative costs for $2019$ are $1,850,000.$ Of this amount, $$1,200,000$ is considered fixed and includes depreciation expense of $$150,000.$ The remainder varies with sales. The budgeted total sales for $2019$ are $$4$ million. All marketing and administrative costs are paid in the month incurred.

Additional information follows:

Cash balance $$40,000$

Management desires to maintain an end$-$of$-$month minimum cash balance of $$40,000.$ The firm has an agreement with a local bank to borrow its short$-$term needs in multiples of $$1,000$ up to $$100,000$ at an annual interest rate of $12\%.$ Borrowings are assumed to occur at the end of the month. Bank borrowing at July $1$ is $$0.$

Required:

On the basis of the preceding data and projections, prepare the following budgets:

$1.$ Sales budget for July

$2.$ Production budget for July

$3.$ Production budget for August

$4.$ Direct materials needed budget for July $($in units and dollars$)$

$5.$ Direct materials purchased budget for July $($in units and dollars$)$

$6.$ Direct manufacturing labor budget for July

$7.$ Manufacturing overhead budget for July

$8.$ Marketing and administration costs budget for July

$9.$ Cost of goods sold budget for July

$10.$ Budgeted income statement for July

$11.$ Cash collections schedule for July

$12.$ Cash disbursements schedule for July

$13.$ Cash budget for July