PROBLEM 8-30 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 Marceting Department has estimated sales as follows for the remainder of the year (in units) Juh August 70,000 November 10,000 September 50,000 December 10,000 30,000 October 20,000 The selling price of the beach umbrellas is $12 per unit b. All sales are on account Based on past experianca, sales are collected in the following pattern: 30% in the month of sale 55% in the month following sale 5% uncollectible Sales for June totaled $300,000. c. The coma y man ans fins ed goods m en res equal to 15% ofthe 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 that the ending inventory of Gilden be equal to 50% ofthe folloing month's production needs. The inventory of Gilden on hand at the beginning and end of the quarter will be: June 30 September 30 72,000 feet feet e. Gilden costs $0.80 per foot. One-half of a month's purchases of Gilden is paid for in the moath 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. 1. Calculate the estimated sales, by month and in total, for the third quarter (Hint: Refer to Schedule 1 for guidanoe). 2. Calculate the expected cash collections, by month and in total, for the third quarter (Hint: Refer to Schedule 1 for 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 Page 409 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 moath and in total, for the third quarter guidance). Rafer to Schedule 2 for guidance) Rafer to Schedule 3 for guidance). Schedule 3 for guidanca). Hint: Refer to Schedule 3 for guidanoa). PROBLEM 8-30 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 Marceting Department has estimated sales as follows for the remainder of the year (in units) Juh August 70,000 November 10,000 September 50,000 December 10,000 30,000 October 20,000 The selling price of the beach umbrellas is $12 per unit b. All sales are on account Based on past experianca, sales are collected in the following pattern: 30% in the month of sale 55% in the month following sale 5% uncollectible Sales for June totaled $300,000. c. The coma y man ans fins ed goods m en res equal to 15% ofthe 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 that the ending inventory of Gilden be equal to 50% ofthe folloing month's production needs. The inventory of Gilden on hand at the beginning and end of the quarter will be: June 30 September 30 72,000 feet feet e. Gilden costs $0.80 per foot. One-half of a month's purchases of Gilden is paid for in the moath 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. 1. Calculate the estimated sales, by month and in total, for the third quarter (Hint: Refer to Schedule 1 for guidanoe). 2. Calculate the expected cash collections, by month and in total, for the third quarter (Hint: Refer to Schedule 1 for 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 Page 409 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 moath and in total, for the third quarter guidance). Rafer to Schedule 2 for guidance) Rafer to Schedule 3 for guidance). Schedule 3 for guidanca). Hint: Refer to Schedule 3 for guidanoa)