Rolen, Inc., is in the process of preparing the fourth quarter budget for 2010, and the following data have been assembled:

The company sells a single product at a price of $25 per unit. The estimated sales volume for the next six months is as follows:

September13,000 units

October.12,000 units

November14,000 units

December.20,000 units

January...9,000 units

February10,000 units

All sales are on account. The companys collection experience has been that 30% of a months sales are collected in the month of sale, 68% are collected in the month following the sale, and 2% are uncollectible. It is expected that the net realizable value of accounts receivable (i.e., accounts receivable less allowance for uncollectible accounts) will be $211,000 on September 30, 2010.

Managements policy is to maintain ending finished goods inventory each month at a level equal to 30% of the next months budgeted sales. The finished goods inventory on September 30, 2010, is expected to be 3,600 units.

To make one unit of finished product, 5 pounds of material are required. Managements policy is to have enough materials on hand at the end of each month to equal 40% of the next months estimated usage. The raw materials inventory is expected to be 25,200 pounds on September 30, 2010.

The cost per pound of raw material is $2, and 70% of all purchase are paid for in month of purchase; the remainder is paid in the following month. The accounts payable for raw material purchases is expected to be $37,980 on September 30, 2010.

Required:

a. Prepare a sales budget in units and dollars, by month and in total, for the fourth quarter (October, November, and December) of 2010.

b. Prepare a schedule of cash collections from sales, by month and in total, for the fourth quarter of 2010.

c. Prepare a production budget in units, by month and in total, for the fourth quarter of 2010.

d. Prepare a materials purchases budget in pounds, by month and in total, for the fourth quarter in 2010.

e. Prepare a schedule of cash payments for materials, by month and in total, for the fourth quarter in 2010.