Problem 1. Capes Corporation has budgeted sale of its popular scooter as follows:

Month	Units	Unit Price	Budgeted sales
June	60,000	$10	$600,000
July	50,000	$10	$500,000
August	20,000	$10	$200,000
September	30,000	$10	$300,000
October	40,000	$10	$400,000

From past experience, the company has learned that 40% of a months sale are collected in the month of sale, another 60% are collected in the month following the sale.

1. Prepare a schedule of expected cash collections from sales for the third quarter (July, August, September).

2. What is the accounts receivable balance as of the end of September?

The company is now in the process of preparing a production budget. Past experience has shown that end-of-month inventory levels must equal 10% of the following months unit sales. Julys Beginning finished goods inventory is 5000 units.

3. Prepare a production budget by month and in total, for the third quarter (July, August, September).

Problem 2. Two pounds of organic flour are required for each pack of pasta made by Healthy Food Inc. The cost of organic flour is $0.5 per pound. Budgeted production of Healthy Food Inc.s pasta (in pack) for January to April is as follows:

	January	February	March	April
Budged production of pasta, in pack	70,000	80,000	60,000	50,000

As part of the companys policy, the inventory of organic flour at the end of a month must be equal to 20% of the following months production needs. The beginning inventory of organic flour for January is 28,000 pounds.

1. Prepare a direct materials budget for organic flour, by month and in total for January, February, and March.