Milo Company manufactures beach umbrellas. The company is 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 August September 41,000 92,000 61,000 October November December 31,000 17,500 18,000 The selling price of the beach umbrellas is $13 per unit. b. All sales are on account. Based on past experience, sales are collected in the following pattern: 302 in the month of sale 65% in the month following sale 5% uncollectible Sales for June totaled $533,000. c. The company maintains finished 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 feet of Gilden, a material that is sometimes hard to acquire. Therefore, the company requires that the ending inventory of Gilden 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: June 30 September 30 97,300 feet 2 feet e. Gilden costs $0.60 per foot. One-half of a month's purchases of Gilden is paid for in the month of purchase; the remainder is paid for in the following month. The accounts payable on July 1 for purchases of Gilden during June will be $53,790. Required: 1. Calculate the estimated sales, by month and in total, for the third quarter. 2. Calculate the expected cash collections, by month and in total, for the third quarter. 3. Calculate the estimated quantity of beach umbrellas that need to be produced in July, August, September, and October. 4. Calculate the quantity of Gilden (in feet) that needs to be purchased by month and in total, for the third quarter. 5. Calculate the cost of the raw material (Gilden) purchases by month and in total, for the third quarter. 6. Calculate the expected cash disbursements for raw material (Gilden) purchases, by month and in total, for the third quarter. Req 1 Req 2 Req 3 Req 4 and 5 Req 6 Calculate the estimated sales, by month and in total, for the third quarter. July August September Quarter $ 1,196,000 $ 793,000 $ 2,522,000 Budgeted sales $ 533,000 Req 1 Reg 2 Req3 Req 4 and 5 Reg 6 Calculate the expected cash collections, by month and in total, for the third quarter. July August September Quarter Total cash collections Req 1 Req 2 Reg 3 Req 4 and 5 Req 6 Req 4 and 5 Calculate the quantity of Gilden (in feet) that needs to be purchased by month and in total, for the third quarter. Calculate the cost of the raw material (Gilden) purchases by month and in total, for the third quarter. (Round your Unit cost of raw materials to 2 decimal places.) July August September Quarter Total units of raw materials to be purchased Cost of raw materials to be purchased Req 1 Req 2 Reg 3 Req 4 and 5 Req 6 Calculate the expected cash disbursements for raw material (Gilden) purchases, by month and in total, for the third quarter. July August September Quarter Total cash disbursements A cash budget, by quarters, is given below for a retail company (000 omitted). The company requires a minimum cash balance of at least $8,000 to start each quarter. Fill in the missing amounts. (Enter your answers in thousands of dollars. Cash deficiencies and Repayments should be indicated by a minus sign.) Quarter (000 omitted) 2 3 (000 omitted) Year 1 4 $ 9 Cash balance, beginning Add collections from customers Total cash available 781 99 348 87 38 48 30 30 30 121 10 10 13 43 2 2 2 2 90 Less disbursements: Purchase of inventory Selling and administrative expenses Equipment purchases Dividends Total disbursements Excess (deficiency) of cash available over disbursements Financing Borrowings Repayments (including interest) * Total financing Cash balance, ending *Interest will total $1,000 for the year. (2) 16 141 (17)
