MPGCompany specializes in unique baskets. The company has budgeted the following sales for the first four months of the year:

Month

Expected sales in units

January

4,000

February

6,000

March

20,000

April

2,000

The selling price of thebaskets is $30 per unit. Based on history, the company expects that 10% of sales are cashreceivedin the month of sale. Of the credit sales,half is collected one month after sale and the remainder is collected two months after sale.Accounts receivable as at January1stwas $100,000; all of which is expected to be collected in January.

The company wants ending inventory to be equal to 20% of the following month's budgeted sales in units. On January 1st, 1,000 units were on hand.

Required:

a. Prepare a sales budget for the first quarter of the year.

b. Prepare a schedule of expected cash collections for the first quarter of the year.

c. Prepare a production budget for the first quarter of the year.