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 42,000 October 32,000 August 82,000 November 22,000 September 62,000 December 22,000 The selling price of the beach umbrellas is $12 per unit. Sales in June were 37,000 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 96,000 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 $88,000. 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. 2. Prepare a production budget for each of the months July to October. 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. 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 42,000 October 32,000 August 82,000 November 22,000 September 62,000 December 22,000 The selling price of the beach umbrellas is $12 per unit. Sales in June were 37,000 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 96,000 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 $88,000. 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. 2. Prepare a production budget for each of the months July to October. 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.

MILO COMPANY
Schedule of Expected Cash Collections
	July	August	September	Quarter
Accounts receivable, June 30	$133,200selected answer incorrect	not attempted	not attempted	not attempted
July sales	not attempted	not attempted	not attempted	not attempted
August sales	not attempted	not attempted	not attempted	not attempted
September sales	not attempted	not attempted	not attempted	not attempted
Total cash collections	$133,200	$0	$0	$133,200

Prepare a production budget for each of the months July to Octob

MILO COMPANY
Production Budget for July-October
	July	August	September	October
Budgeted sales (units)	42,000	82,000	62,000	32,000
Add: Desired ending inventory
Total needs
Deduct: Beginning inventory
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.

MILO COMPANY
Materials Budget
	Month
	July	August	September	Quarter
Total needs (metres)

MILO COMPANY
Schedule of Expected Cash Payments
	July	August	September	Quarter
Accounts payable, June 30
July purchases
August purchases
September purchases
Total cash payments	$0	$0	$0	$0