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Hilya Inc. specializes in manufacturing deluxe kites. The company has budgeted the following sales: Month Expected sales in units July 40,000 August 60,000 September 30,000
Hilya Inc. specializes in manufacturing deluxe kites. The company has budgeted the following sales: Month Expected sales in units July 40,000 August 60,000 September 30,000 October 20,000 The company sells the kites for $25 per unit. Based on history, the company expects that 20% of sales are cash received in the month of sale. Of the credit sales, half is collected one month after sale and the remainder is collected two months after sale. Accounts receivable as at June 30th was $100,000; all of which is expected to be collected in July. To protect against inventory shortages (in case sales are higher than expected), the company has a policy that ending finished goods inventory is 20% of the following month's sales. The company had ending inventory on June 30th of 11,000 kites. Required: a) Prepare a sales budget for the third quarter of the year. b) Prepare a schedule of expected cash collections for the third quarter of the year. c) Prepare a production budget for the third quarter of the year
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