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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

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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 the budget preparation: a. The Marketing Department has estimated sales as follows for the remainder of the year (in units): July 32,000 October 22,000 August 72,000 November 12,000 September 52,000 December 12,000 The selling price of the beach umbrellas is $12 per unit. Sales in June were 27,000 units. b. All sales are on account. 0n 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 c. The company maintains nished goods inventories equal to 15% of the following month's sales. This requirement will be met at the end of June. d. 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 month's production needs. The inventory of Gilden on hand at the beginning and end of the quarter will be as follows: June 30 76,000 metres September 30 ? metres e. Gilden costs $0.80 per metre. One-half ofa month's purchases of Gilden are paid for in the month of purchase; the remainder are paid for in the following month. The accounts payable on Ju|y1 for purchases of Gilden during June will be $78,000. 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. 0 Answer is complete and correct. Budgeted sales $ 384,000 0 $ 864,000 0 $ 624.000 0 $5 872 000 0 0 Answer is complete and correct. Accounts receivable, June 30 $210,600 0 $ 210,600 0 July sales 115,200 0 249,600 9 364,800 0 August sales 259,200 0 561,600 0 820,800 0 September sales 187,200 0 187,200 0 . $ Total cash collections $ 325,800 $ 508,800 $ 748,800 1,583,400 2. Prepare a production budget for each of the months July to October. 0 Answer is complete and correct. Budgeted sales (units) Add: Desired ending inventory Total needs Deduct: Beginning inventory 0 00 :P on o o 0 _' P m o o 0 .\" on o o 0 5\" w o o 0 Required production 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. Q Answer is not complete. Production needs (meters) Add: Desired ending inventory (metres) Total needs (metres) 152,000 9

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