PROBLEM $8-30$ Integration of the Sales, Production, and Direct Materials Budgets LO$8-2,$ LO$8-3,$ LO$8-4$

Milo Company manufactures beach umbrellas. The company is preparing budgets for the third quarter and assembled the following

information:

a$.$ The Marketing Department estimated unit sales as follows for the remainder of the year:

The selling price of the beach umbrellas is $$12$ per unit.

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 will be met at the end

of June.

d$.$ Each beach umbrella requires $4$ feet of Gilden, a material that is sometimes hard to acquire. Therefore, the company requires ending

inventory of Gilden equal to $50\%$ of the following month's production needs. The inventory of Gilden on hand at the beginning and end

of the quarter will be:

June $30$

$72,000$ feet

September $30$

$?$ feet

e$.$ Gilden costs $$0\mathrm{.}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:

Calculate the estimated sales, by month and in total, for the third quarter. $($Hint: Refer to Schedule $1$ for guidance.$)$

Calculate the expected cash collections, by month and in total, for the third quarter. $($Hint: Refer to Schedule $1$ for guidance.$)$

Calculate the estimated quantity of beach umbrellas that need to be produced in July, August, September, and October. $($Hint: Page $399$

Refer to Schedule $2$ for guidance.$)$

Calculate the quantity of Gilden $($in feet$)$ that needs to be purchased by month and in total, for the third quarter. $($Hint: Refer to

Schedule $3$ for guidance.$)$

Calculate the cost of the raw material $($Gilden$)$ purchases by month and in total, for the third quarter. $($Hint: Refer to Schedule $3$ for

guidance.$)$

Calculate the expected cash disbursements for raw material $($Gilden$)$ purchases, by month and in total, for the third quarter. $($Hint: Refer

to Schedule $3$ for guidance.$)$