Milo Company manufactures beach umbrellas The company is now preparing detailed budgets for the third quarter and has assembled the following information to assist in the budget preparation The Marketing Department has estimated sales as follows for the remainder of the year (in units) July 44,000 October 34,000 August 84,000 November 24,000 September 64,000 December 24,000 The selling price of the beach umbrellas is $12 per unit Sales in June were 39,000 units All sales are on account On the basis of past experience, sales are collected in the following pattern 30 in the month of sale 65 in the month following sale 5 uncollectible The company maintains finished goods inventories equal to 15 of the following months sales This requirement will be met at the end of June Each beach umbrella requires 4 metres of Gilden, a material that is sometimes hard to get Therefore, the company requires that the inventory of Gilden on hand at the end of each month be equal to 50 of the following months production needs The inventory of Gilden on hand at the beginning and end of the quarter will be as follows June 30 100,000 metres September 30 metres Gilden costs $0 80 per metre One half of a months purchases of Gilden are paid for in the month of purchase the remainder are paid for in the following month The accounts payable on July 1 for purchases of Gilden during June will be $90,000 Required 1 Prepare a sales budget, by month and in total, for the third quarter Also, prepare a schedule of expected cash collections, by month and in total, for the third quarter July August September Quarter Budgeted sales July August September Quarter Accounts Receivable, June 30 July Sales August Sales September sales Total cash collections $ $ $ $ 2 Prepare a production budget for each of the months July to October Production Budget for July October July August September October Total needs 3 Prepare a materials purchases budget for Gilden, by month and in total, for the third quarter Also, prepare a schedule of expected cash payments for Gilden, by month and in total, for the third quarter July August September Quarter Total needs (metres) Schedule of Expected Cash Payments July August September Quarter Accounts Payable, June 30 July purchases August purchases September purchases Total cash payments $ $ $ $

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Milo Company manufactures beach umbrellas. The company is now preparing detailed budgets for the third quarter and has assembled the following information to assist in

Milo Company manufactures beach umbrellas. The company is now preparing detailed budgets for the third quarter and has assembled the following information to assist in the budget preparation:

The Marketing Department has estimated sales as follows for the remainder of the year (in units):


July	44,000	October	34,000
August	84,000	November	24,000
September	64,000	December	24,000

The selling price of the beach umbrellas is $12 per unit. Sales in June were 39,000 units.

All sales are on account. On the basis of past experience, sales are collected in the following pattern:


30	%	in the month of sale
65	%	in the month following sale
5	%	uncollectible

The company maintains finished goods inventories equal to 15% of the following months sales. This requirement will be met at the end of June.
Each beach umbrella requires 4 metres of Gilden, a material that is sometimes hard to get. Therefore, the company requires that the inventory of Gilden on hand at the end of each month be equal to 50% of the following months production needs. The inventory of Gilden on hand at the beginning and end of the quarter will be as follows:


June 30	100,000	metres
September 30	?	metres

Gilden costs $0.80 per metre. One-half of a months purchases of Gilden are paid for in the month of purchase; the remainder are paid for in the following month. The accounts payable on July 1 for purchases of Gilden during June will be $90,000.

Required: 1. Prepare a sales budget, by month and in total, for the third quarter. Also, prepare a schedule of expected cash collections, by month and in total, for the third quarter.

	July	August	September	Quarter
Budgeted sales

	July	August	September	Quarter
Accounts Receivable, June 30
July Sales
August Sales
September sales
Total cash collections	$	$	$	$

2. Prepare a production budget for each of the months July to October.

Production Budget for July-October
	July	August	September	October


Total needs

3. Prepare a materials purchases budget for Gilden, by month and in total, for the third quarter. Also, prepare a schedule of expected cash payments for Gilden, by month and in total, for the third quarter.

	July	August	September	Quarter


Total needs (metres)

Schedule of Expected Cash Payments	July	August	September	Quarter
Accounts Payable, June 30
July purchases
August purchases
September purchases
Total cash payments	$	$	$	$