Problem 3 Budgeting and Profit Planning (25 points) Ryan and Jessica Sports Company manufacture and sell a product that has seasonal variations in demand, with peak sales coming in the third month. The sales price of the product is $8 per unit. The following information concerns the sales forecasts in units for the next six months: January February March April May June Budgeted Sales in Units 40.000 60,000 | 100,000 50,000 | 70,000 80,000 Sales are collected in the following pattern: 75% in the month the sales are made, and the remaining 25% in the following month. At the beginning of January, the company's balance sheet showed $65,000 in accounts receivable, all of which will be collected in January. Bad debts are negligible and can be ignored. The company desires an ending inventory balance at the end of each month equal to 30% of budgeted sales for the next month. This requirement was met last year and so at the beginning of January, the company had 12,000 units in inventory. Five kilos of raw materials are required to complete one unit of product. The company requires ending inventory of raw materials at the end of each month equal to 10% of the production needs of the following month. Again this requirement was met last year so the company had 23,000 kilos worth of raw materials in inventory at the beginning of January. Finally, the raw material costs $0.80 per kilo. Purchases of raw material are paid for in the following pattern: 60% paid in the month the purchases were made, and the remaining 40% paid in the following month. At the beginning of January, the company's balance sheet showed $81,500 in accounts payable for raw material purchases, all of which will be paid in the January Required: Prepare the following budgets for the next FOUR months (don't worry about totals for the four months) 1) Sales budget (3 points) 2) Cash collections budget (4 points) 3) Production budget (6 points) 4) Direct materials purchases budget and (6 points) 5) Schedule of expected cash payments for material purchases (6 points)