1. Jaimes Hat Shop sells hats with school logos on them; the hats sell for $22 each. This year, Jaimes expects to sell 350 hats in August, 300 in September, 400 in October, 800 in November, 1040 in December and 750 in January. On average, 25 per cent of customers purchase on credit. Jaimes allows those customers to pay for their purchases the month after they have made their purchases. Prepare a sales budget for Jaimes Hat Shop for the second quarter of this financial year, assuming the second quarter starts in October. Include the expected cash collection schedule for the second quarter of this financial year.
2. Refer to the question above. Business policy is to plan to end each month with an ending inventory equal to 20 per cent of the next months projected sales. Jaimes pays $8 for each hat that it purchases. Jaimes and its supplier have an arrangement that allows Jaimes to pay for each purchase 60 days after the purchase. Prepare a purchases budget for the second quarter of this financial year for Jaimes Hat Shop.
3. Refer to question 1 and assume Jaimes ended the first quarter of this financial year with 60 hats on hand. a) Notice that Jaimes ended the first quarter with less than 20 per cent of projected sales for October. What do you think accounts for the difference? b) How many hats should Jaimes purchase in October?