Milo Corporation 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 30,000 October 20,000 August 70,000 November 10,000 September 50,000 December 10,000

The selling price of the beach umbrellas is $36 per unit. Sales in June were 25,000 units.

The company maintains finished goods inventories equal to 15% of the following months sales.

Each beach umbrella requires four 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 company had 72,000 metres of Gilden on hand at June 30. Gilden costs $0.80 per metre.

Each umbrella also requires 8 metres of steel piping. The company carries inventory of steel piping on hand at the end of each month to be equal to 12% of the following months production needs. The company had 35,000 metres of steel piping on hand at June 30. Steel piping costs $0.50 per metre.

The company estimates that it requires two employees spending 0.5 hours each in assembling one umbrella. The employees get paid at a rate of $11.50 per hour.

Manufacturing overhead costs are allocated at a rate of $8 per direct labour hour.

Prepare an operational budget for the third quarter.

(Not sure if what I have down so far is correct..)

OPERATIONAL BUDGET FOR: SALES BUDGET Forecasted sales (units) Selling price TOTAL SALES JULY 30,000 36.00 $ 108,000,000 $ AUGUST SEPTEMBER 30,000 50,000 36.00 $ 36.00 $ 2,520,000 $ 1,800,000 $ OCTOBER 20,000 36.00 $ 5,400,000 $ $ $ NOVEMBER 10,000 36.00 36,000 JULY OCTOBER PRODUCTION BUDGET Budgeted sales (units) Desired ending inventory Total needs Beginning inventory REQUIRED PRODUCTION (units) 30,000 10,500 40,500 4,500 36,000 AUGUST 70,000 7,500 77,500 10,500 67,000 SEPTEMBER 50,000 3,000 53,000 7,500 45,500 20,000 1,500 21,500 3,000 18,500 + DIRECT MATERIALS BUDGET-GILDEN Required production (units) Materials needed per unit (metres) Production needs (metres) Desired ending inventory Total needs Beginning inventory Materials to be purchased (metres) Cost of materials per metre COST OF MATERIALS TO BE PURCHASED COST PER UNIT-GILDEN DIRECT MATERIALS BUDGET - STEEL Required production (units) Materials needed per unit (metres) Production needs (metres) Desired ending inventory Total needs Beginning inventory Materials to be purchased (metres) Cost of materials per metre COST OF MATERIALS TO BE PURCHASED COST PER UNIT-STEEL DIRECT LABOUR BUDGET Required production (units) Direct hours per unit Direct labour hours required Cost of labour per hour COST OF DIRECT LABOUR COST PER UNIT-LABOUR MANUFACTURING OVERHEAD Required labour hours required Allocation rate per labour hour COST OF MANUFACTURING OVERHEAD