Question 4 (15 marks)

Excellent Corporation has the following budgeted sales for the next six-month period:

Month	Unit Sales
June	90,000
July	120,000
August	210,000
September	150,000
October	180,000
November	120,000

Each unit is expected to sell for $125. Sixty percent of sales are on credit, forty percent are cash sales. Of the credit sales, 40% is collected in the month of sale, 60% in the month following. There are no bad debts. The June Accounts Receivable balance will be collected in July.

There were 50,000 units of finished goods in inventory at the beginning of June. Plans are to have an inventory of finished products that equal 30% of the unit sales for the next month.

Seven kilograms of materials are required for each unit produced. Each kilogram of material costs $10. Inventory levels for materials are equal to 30% of the production needs for the next month. Materials inventory on June 1 was 15,000 kilograms.

Materials are purchased in the month before production and are paid 50% in the month of purchase and 50% in the month following. The June Accounts Payable balance will be collected in July.

Required:

1. Prepare production budgets in units for July and August. (4 marks)
2. Prepare a materials purchases budget in kilograms for July and August. (4 marks)
3. Prepare the Cash Collections from Sales for July and August. (4 marks)
4. Prepare the Cash Disbursements for Materials for July and August. (3 marks)