QUESTION 3

1. The sales budget is provided below for the product of Company ABC.

Jan	10,000 units
Feb	40,000 units
Mar	50,000 units
Apr	60,000 units
May	40,000 units

1. Finished goods at the end of each month must be 20% of the next months budgeted sales.
2. On Dec 31 of the last year, the finished goods totaled 3,000 units.
3. The selling price is $1 per unit.
4. 70% of the credit sales are collected in the month of sale, 25% in the month following sale, and the remainder are uncollectible.

Required: (Please note that you should answer the questions in Word offline and please do NOT answer in the Blackboard!!!)

5. Prepare a budget showing the required production each month for January, February, March, and the quarter. (5 marks)
6. Prepare the cash collection for each month for January, February, March, and the quarter. (5 marks)