Water Sports Inc. manufactures a small personal water tube used for children learning to swim. Management is now preparing detailed budgets for the third quarter, July through September, and has assembled the following information to assist:

a. The Marketing Department has estimated sales as follows for the remainder of the year (number of water tubes):

July 8,200 October 4,600

August 6,700 November 4,200

September 5,700 December 3,700

The selling price of the water tubes is $50.

b. All sales are on account. Based on past experience, sales are expected to be collected in the following pattern:

50% in the month of sale

45% in the month following sale

5% uncollectible

The beginning accounts receivable balance (excluding uncollectible amounts) on July 1 will be $168,500.

c. The company maintains finished goods inventories equal to 20% of the following month's sales. The inventory of finished goods on July 1 will be 1,640 units.

d. Each water tube requires 4 kilograms of synthetic polyisoprene rubber compound. To prevent shortages, the company would like the inventory of synthetic rubber compounds on hand at the end of each month to be equal to 20% of the following month's production needs. The inventory of synthetic rubber compounds on hand on July 1 will be 6,320 kilograms.

e. The synthetic rubber compound costs $4.50 per kilogram. Water Sport pays for 70% of its purchases in the month of purchase; the remainder is paid for in the following month. The accounts payable balance for synthetic rubber compound purchases will be $16,500 on July 1.

Required:

1.Make a sales budget, by month and in total, for the third quarter. (Show your budget in both units of water tubes and dollars.) Also make a schedule of expected cash collections, by month and in total, for the third quarter.

Sales budget

July August September Quarter

Budgeted sales (units) jQuery22409941060075938688_1615661175256? ??? ??? ???

Selling price per unit ??? ??? ??? ???

Total budgeted sales ??? ??? ??? ???

Schedule of expected cash collections

July August September Quarter

Accounts receivable, beginning balance ??? ??? ??? ???

July sales: ??? ??? ??? ???

August sales: ??? ??? ??? ???

September sales: ??? ??? ??? ???

Total cash collections ??? ??? ??? ???

2.Make a production budget for each of the months July through October.

Production budget

July August September October

Budgeted sales (units) ??? ??? ??? ???

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Total needs ??? ??? ??? ???

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Required production (units) ??? ??? ??? ???

3.Make a direct materials purchases budget for synthetic rubber compounds, by month and in total, for the third quarter. Also make a schedule of expected cash disbursements for synthetic rubber compound, by month and in total, for the third quarter.

Direct materials purchases budget

July August September Quarter

Required production (units) ??? ??? ??? ???

Material D236 needed per unit (kgs.) ??? ??? ??? ???

Production needs (kgs.) ??? ??? ??? ???

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Total Material D236 needs ??? ??? ??? ???

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Raw materials to be purchased ??? ??? ??? ???

Cost of raw materials to be purchased at $4.50 per kg ??? ??? ??? ???

Schedule of expected cash disbursement

July August September Quarter

Accounts payable, beginning balance ??? ??? ??? ???

July purchases: ??? ??? ??? ???

August purchases: ??? ??? ??? ???

September purchases: ??? ??? ??? ???

Total cash disbursements ??? ??? ??? ???