Problem 8 28 Integration of the Sales, Production, and Direct Materials Budgets LO8 2, LO8 3, LO8 4 Milo Company manufactures beach umbrellas The company is preparing detailed budgets for the third quarter and has assembled the following information to assist in the budget preparation a The Marketing Department has estimated sales as follows for the remainder of the year (in units) The selling price of the beach umbrellas is $14 per unit July 38,500 October 28,500 August 87,000 November 15,000 September 56,000 December 15,500 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 $504,000 c The company maintains finished goods inventories equal to 15 of the following months 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 that the ending inventory of Gilden be equal to 50 of the following months production needs The inventory of Gilden on hand at the beginning and end of the quarter will be June 30 91,550 feet September 30 feet e Gilden costs $0 60 per foot One half of a months 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 $49,290 Required 1 a Prepare a sales budget, by month and in total, for the third quarter 1 b Prepare a schedule of expected cash collections, by month and in total, for the third quarter 2 Prepare a production budget for each of the months JulyOctober 3 a Prepare a direct materials budget for Gilden,, by month and in total, for the third quarter (Round your Unit cost of raw materials to 2 decimal places ) 3 b Prepare a schedule of expected cash disbursements for Gilden,, by month and in total, for the third quarter Garrison 15e Recheck 2015 01 16 References eBook Resources Expanded table Difficulty 2 MediumLearning Objective 08 03 Prepare a production budget Problem 8 28 Integration of the Sales, Production, and Direct Materials Budgets LO8 2, LO8 3, LO8 4 Learning Objective 08 02 Prepare a sales budget, including a schedule of expected cash collections Learning Objective 08 04 Prepare a direct materials budget, including a schedule of expected cash disbursements for purchases of materials

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Problem 8-28 Integration of the Sales, Production, and Direct Materials Budgets [LO8-2, LO8-3, LO8-4] Milo Company manufactures beach umbrellas. The company is preparing detailed budgets

Problem 8-28 Integration of the Sales, Production, and Direct Materials Budgets [LO8-2, LO8-3, LO8-4]

Milo Company manufactures beach umbrellas. The company is preparing detailed budgets for the third quarter and has assembled the following information to assist in the budget preparation:

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

The selling price of the beach umbrellas is $14 per unit.


July	38,500	October	28,500
August	87,000	November	15,000
September	56,000	December	15,500

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 $504,000.

c.	The company maintains finished goods inventories equal to 15% of the following months 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 that the ending inventory of Gilden be equal to 50% of the following months production needs. The inventory of Gilden on hand at the beginning and end of the quarter will be:


June 30	91,550	feet
September 30	?	feet

e.	Gilden costs $0.60 per foot. One-half of a months 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 $49,290.

Required:

1-a.	Prepare a sales budget, by month and in total, for the third quarter.

1-b.	Prepare a schedule of expected cash collections, by month and in total, for the third quarter.

2.	Prepare a production budget for each of the months JulyOctober.

3-a.	Prepare a direct materials budget for Gilden,, by month and in total, for the third quarter. (Round your Unit cost of raw materials to 2 decimal places.)

3-b.	Prepare a schedule of expected cash disbursements for Gilden,, by month and in total, for the third quarter.

Garrison 15e Recheck 2015-01-16

References

eBook & Resources

Expanded tableDifficulty: 2 MediumLearning Objective: 08-03 Prepare a production budget.

Problem 8-28 Integration of the Sales, Production, and Direct Materials Budgets [LO8-2, LO8-3, LO8-4]Learning Objective: 08-02 Prepare a sales budget, including a schedule of expected cash collections.Learning Objective: 08-04 Prepare a direct materials budget, including a schedule of expected cash disbursements for purchases of materials.