Water Sport Inc. manufactures a small personal water tube used for children lear
ID: 2545044 • Letter: W
Question
Water Sport Inc. manufactures a small personal water tube used for children learning to swim. 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): 4,900 7,000 November4,500 August The selling price of the water tubes is $50 in the following All sales are on account. Based on past experience, sales are expected to be pattern b. 50% 45% in the month of sale in the month following sale The beginning accounts receivable balance (excluding uncollectible amounts) on July 1 will be $170,000 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 1,700 units. Each water tube requires 4 kilograms of synthetic polyisoprene rubber compound. To prevernt shortages the company would like the inventory of synthetic rubber compound 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 compound on hand on July 1 will be 6,560 kilograms. d. e. The synthetic rubber compound costs $3.50 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 $17,400 on July 1. Required: 1. Prepare a sales budget, by month and in total, for the third quarter. (Show your budget in both units of water tubes and dollars.) Álso prepare a schedule of expected cash collections, by month and in total, for the third quarter.Explanation / Answer
1. Sales Budget
Schedule of Expected Cash Collections:
2. Production Budget :
3. Direct Materials Purchases Budget:
$
78,232
Schedule of Expected Cash Disburesements:
July August September Quarter Budgeted Sales ( units) 8,500 7,000 6,000 21,500 Selling price per unit $ 50 $ 50 $ 50 $ 50 Total Budgeted Sales $ 425,000 $ 350,000 $ 300,000 $ 1,075,000Related Questions
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