PROBLEM 3-30 Integration of the Sales, Production, and Direct Materials Budgets LO8-2, L03-3LO8-4 Milo Company manufactures beach umbrellas. The company is preparing detailed budgets for the third quarter and has assembled he following informat tion to assist in the budget preparation: a. The Marketing Department has estimated sales as follows for the remainder of the year (in units) 30,000 October 20,000 August 70,000 November 10,000 September 50,000 December 10,000 of the beach umbrellas is $12 per unit. The selling pricc b. All sales are on account. Based on past experience, sales are collected in the following pattern: 30% in the month of sale 65% in the month following sale 5% uncollectible Sales for June totaled $300,000 c. The company maintains finished goods inventories equal to 15% of the following month's sales. This requirement Page 384 will be met at the cnd of Junc 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 c quarter will be 72,000 feet feet June 30 September 30 c. Gilden costs $0.80 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 $76,000. Required: 1. Calculate the estimated sales, by month and in total, for the third quarter (Hint: Refer to Schedule 1for guidance) 2. Calculate the expected cash collections, by month and in total, for the third quarter (Hint: Refer to Schedule 1 for guidancc). 3. Calculate the estimated quantity of beach umbrellas that need to be produced in July, August, September, and October (Hint: 4. Calculate the quantity of Gilden (in feet) that needs to be purchased by month and in total, for the third quarter (Hint: Refer to 5. Calculate the cost of the raw material (Gilden) purchases by month and in total, for the third quarter (Hint: Refer to 6. Calculate the expected cash disbursements for raw material (Gilden) purchases, by month and in total, for the third quarter Refer to Schedule 2 for guidancc). Schedule 3 for guidance). Schedule 3 for guidance). Hint: Refer to Schedule 3 for guidance)