Version $2$

Section I

The data below pertains to the first quarter of Alpha Company which manufactures toys.

Below is the estimated sales $($in units$)$:

$\backslash$table$[[$January$,60,000],[$February $80,000,],[$March $,90,000,],[$April$,70,000],[$May$,50,000],[$June$,80,000]]$

a$.$ The selling price of the toy is $$12$ per unit.

b$.$ All sales are on account.

Based on past experience, sales are collected in the following pattern:

Month of sale $,40\%$

Month following sale $55\%$

Uncollectible $,5\%$

c$.$ Sales for December of last year totaled $$200,000.$

d$.$ The company maintains finished goods inventories equal to $15\%$ of the following month's sales.

e$.$ Each toy requires $4$ kilos of raw materials.

f$.$ The company requires that the ending inventory of raw materials be equal to $20\%$ of the following month's production needs.

g$.$ The raw material costs $$1\mathrm{.}30$ per kilo.

h$.30\%$ of a month's purchases of raw materials is paid for in the month of purchase; the remainder is paid after two months

i$.$ The accounts payable on December $31$ of last year was $$54,000.$

Required for Part I

Prepare:

a$.$ Prepare a sales budget, by month and in total, for the first quarter.

$(3$ marks$)$

b$.$ Prepare a schedule of expected cash collections, by month and in total, for the first quarter.

$(11$ marks$)$

c$.$ Prepare a production budget for each months of the first quarter. $(10$ marks$)$

d$.$ Prepare a direct materials budget, by month and in total, for the first quarter.

$(12$ marks$)$

e$.$ Prepare a schedule of expected cash disbursements, by month and in total, for the first quarter.

$(12$ marks$)$

Total of Section I $(48$ marks$)$

End of Section I