Swanson, Inc., manufactures an advanced swim fin for scuba divers. Management is
ID: 2476647 • Letter: S
Question
Swanson, Inc., manufactures an advanced swim fin for scuba divers. Management is now preparing detailed budgets for the third quarter, July through September, and has assembled the following information to assist in preparing the budget:
The company maintains finished goods inventories equal to 9% of the following month’s sales. The inventory of finished goods on July 1 will be 684 pairs.
Each pair of swim fins requires 4 pounds of geico compound. To prevent shortages, the company would like the inventory of geico compound on hand at the end of each month to be equal to 20% of the following month’s production needs. The inventory of geico compound on hand on July 1 will be 6,152 pounds.
Geico compound costs $2.50 per pound. Crydon pays for 60% of its purchases in the month of purchase; the remainder is paid for in the following month. The accounts payable balance for geico compound purchases will be $15,800 on July 1.
Prepare a sales budget, by month and in total, for the third quarter.
Prepare a schedule of expected cash collections, by month and in total, for the third quarter. (Do not round intermediate calculations.)
Prepare a direct materials budget for geico compound, by month and in total, for the third quarter. (Do not round intermediate calculations.)
Prepare a schedule of expected cash disbursements for geico compound, by month and in total, for the third quarter. (Do not round intermediate calculations.)
Swanson, Inc., manufactures an advanced swim fin for scuba divers. Management is now preparing detailed budgets for the third quarter, July through September, and has assembled the following information to assist in preparing the budget:
Explanation / Answer
1a.
Swanson Inc
Sales Budget
Particulars
July
Aug
Sep
Sales in Units
7,600
8,600
6,600
Selling Price
$33
$33
$33
Sales in $
$250,800
$283,800
$217,800
1 b.
Swanson Inc
Expected Collections
Particulars
July
Aug
Sep
Cash receipt from Current Sales
$107,844
$122,034
$93,654
Total
Cash receipt from Previous month Sales
$120,384
$136,224
Cash receipt from last 2 months backSales
$22,572
Total Collections
$107,844
$242,418
$252,450
$602,712
2.
Swanson Inc
Production Budget
Particulars
July
Aug
Sep
Oct
Sales in Units
7,600
8,600
6,600
5,600
Less: Begning Stock
(684)
(774)
(594)
(504)
Add: Desired Ending Inventory
774
594
504
414
Total Production Requirement
7,690
8,420
6,510
5,510
3a.
Swanson Inc
Purchase Budget
Particulars
July
Aug
Sep
Total
Total Production Requirement
7,690
8,420
6,510
Raw Material required per Unit
4
4
4
Total Raw material
30,760
33,680
26,040
Less: Begning inventory
(6,152)
(6,736)
(5,208)
Add: Desired Ending Inventory
6,736
5,208
4,408
Total Production Requirement
31,344
32,152
25,240
Cost per pound
$2.50
$2.50
$2.50
Total cost of Raw Material
$78,360
$80,380
$63,100
221,840
3 b)
Swanson Inc
Cash Disbursement
Particulars
July
Aug
Sep
Total
Total cost of Raw Material
$78,360
$80,380
$63,100
Payment of Current Month
$47,016
$48,228
$37,860
Payment of Current Month
$31,344
$32,152
Total Payment
$47,016
$79,572
$70,012
$221,840
Swanson Inc
Sales Budget
Particulars
July
Aug
Sep
Sales in Units
7,600
8,600
6,600
Selling Price
$33
$33
$33
Sales in $
$250,800
$283,800
$217,800
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