Milo Company manufactures beach umbrellas. The company is preparing detailed bud
ID: 2445814 • Letter: M
Question
Milo Company manufactures beach umbrellas. The company is preparing detailed budgets for the third quarter and has assembled the following information to assist in the budget preparation:
The Marketing Department has estimated sales as follows for the remainder of the year (in units):
All sales are on account. Based on past experience, sales are collected in the following pattern:
The company maintains finished goods inventories equal to 15% of the following month’s sales. This requirement will be met at the end of June.
Each beach umbrella requires 4 feet of Gilden, a material that is sometimes hard to acquire. Therefore, the company requires that the ending inventory of Gilden be equal to 50% of the following month’s production needs. The inventory of Gilden on hand at the beginning and end of the quarter will be:
Gilden costs $0.60 per foot. One-half of a month’s purchases of Gilden is paid for in the month of purchase; the remainder is paid for in the following month. The accounts payable on July 1 for purchases of Gilden during June will be $47,490.
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.
Prepare a direct materials budget for Gilden,, by month and in total, for the third quarter.
Prepare a schedule of expected cash disbursements for Gilden,, by month and in total, for the third quarter.
Milo Company manufactures beach umbrellas. The company is preparing detailed budgets for the third quarter and has assembled the following information to assist in the budget preparation:
Explanation / Answer
Sales Budget July August September Oct Nov December Sales 37500 85000 54000 27500 14000 14500 S.P. Per Unit 12 12 12 12 12 12 Total Sales 450000 1020000 648000 330000 168000 174000 Cash Collections Total Sales 450000 1020000 648000 330000 168000 174000 30% in Same month 135000 306000 194400 99000 50400 52200 65% in next month 265200 292500 663000 421200 214500 109200 Total Cash Collections 400200 598500 857400 520200 264900 161400