Problem 7-19A Integration of Sales, Production, and Direct Materials Budgets [LO2, LO3, LO4]

Crydon, Inc., manufactures an advanced swim fin for scuba divers. Management is now preparing detailed budgets for the third quarter, July through September, and has assembled the following information to assist in preparing the budget:

a.	The Marketing Department has estimated sales as follows for the remainder of the year (in pairs of swim fins):

The selling price of the swim fins is $18 per pair.

July	6,000	October	4,000
August	7,000	November	3,000
September	5,000	December	3,000

b.	All sales are on account. Based on past experience, sales are expected to be collected in the following pattern:

40%	in the month of sale
46%	in the month following sale
14%	uncollectible

The beginning accounts receivable balance (excluding uncollectible amounts) on July 1 will be $133,000.

c.	The company maintains finished goods inventories equal to 10% of the following month