International Studer Play Store F? Thes a Ful Milo Company manufactures beach um

Question

International Studer Play Store F? Thes a Ful Milo Company manufactures beach umbrellas. The company is now preparing detailed budgets for the third quarter and has assembled the following information to assist in the budget preparation a. The Marketing Department has estimated sales as follows for the remainder of the year (in unts) July August September 65,000 December 25,000 45.000 October 85,000 November 25,000 35,000 The selling price of the beach umbrellas is $10 per unit Sales in June were 40.000 units All sales are on account On the basis of past experience, sales are collected in the following pattern b 40% in the month of sale 55% in the month following sale 536 5% uncollectible c. The company maintains t nished goods inventories equal to 15% of the following months sa es This requirement will be met at the end of June. Each beach umbrella requires 4 metres ot Gilden, a material that is sometimes hard to get Therefore the company requires that the inventory of Gilden on hand at the end of each month beequal to 50% of d month's production needs The inventory of Gilden on hand at the beginning and end of e quarter will be as follows

Explanation / Answer

1 MILO COMPANY Sales Budget July August September Quarter Budgeted sales 450000 850000 650000 1950000 MILO COMPANY Schedule of Expected Cash Collections July August September Quarter Accounts receivable, June 30 220000 220000 July sales 180000 247500 427500 August sales 340000 467500 807500 September sales 260000 260000 Total cash collections $ 400000 587500 727500 1715000 2 MILO COMPANY Production Budget for July-October July August September October November Budgeted sales in units 45000 85000 65000 35000 25000 Add: Desired ending FG inventory (units) 12750 9750 5250 3750 Total needs 57750 94750 70250 38750 Less: Beginning FG inventory (units) 6750 12750 9750 5250 Total production (units) 51000 82000 60500 33500 3 MILO COMPANY Materials Budget July August September Quarter Material required for production (metres) 204000 328000 242000 774000 Add: Desired ending inventory 164000 121000 67000 67000 Total needs (metres) 368000 449000 309000 841000 Less: Beginning inventory 102000 164000 121000 102000 Total material purchases (metres) 266000 285000 188000 739000 Total material purchases $ 212800 228000 150400 591200 MILO COMPANY Schedule of Expected Cash Payments July August September Quarter Accounts payable, June 30 91000 91000 July purchases 106400 106400 212800 August purchases 114000 114000 228000 September purchases 75200 75200 Total cash payments $ 197400 220400 189200 607000

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