Milo Company manufactures beach umbrellas. com following information to assist i
ID: 2552273 • Letter: M
Question
Milo Company manufactures beach umbrellas. com following information to assist in the budget preparation: n u bc The company is preparing detailed budgets for the third quarter and has assembiled the a. The Marketing Department has estimated sales as follows for the remainder of the year (in units: 31,000 October 21,000 July August 72,000 Novenber 7,500 September 41,000 Decenber 8,000 The selling price of the beach umbrellas is $11 per unit b. All sales are on account. Based on past experience, sales are collected in the following pattern: 308 in the month of sale 65% in the month following nale 5% uncollectible Sales for June totaled $231,000. C. The company maintains finished goods inventori es equal to 15% of the following month's sales. This requirement will be met at the end of June. d. Each beach umbrella equires 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 beginning and end of the quarter will be: inventory of Gilden on hand at theExplanation / Answer
Solution:
Part 1 --- Sales budget
Sales Budget
July
August
September
Quarter
Expected Unit Sales
31,000
72,000
41,000
144,000
Unit Selling Price
$11
$11
$11
$11
Budgeted Sales in dollars
$341,000
$792,000
$451,000
$1,584,000
Part 2 – Expected Cash Collection
Schedule of Expected Cash Collection
Sales
% Collected
July
August
September
3rd Quarter Total
June Sales
$231,000
65%
$150,150
July Sales
$341,000
30%
102,300
July Sales
$341,000
65%
221,650
August Sales
$792,000
30%
237,600
August Sales
$792,000
65%
514,800
September Sales
$451,000
30%
$135,300
Total Expected Cash Collection
$252,450
$459,250
$650,100
$1,361,800
Part 3 – Production Budget
Production Budget
July
August
Sept
Quarter
Oct
Nov
Next Month's Expected Unit Sales
72,000
41,000
21,000
7,500
8000
Ratio of inventory to future sales
15%
15%
15%
40%
40%
Budgeted Finished Goods Ending Inventory (units)
10,800
6,150
3,150
3,000
3,200
Add: Budgeted Sales (units)
31,000
72,000
41,000
21,000
Required units of available production
41,800
78,150
44,150
24,000
Less: Budgeted Beginning Inventory (Ending Finished Goods Inventory of last month)
4,650
10,800
6,150
3,150
Units to be produced
37,150
67,350
38,000
142,500
20,850
Part 4 – Raw materials purchases budget
Raw Materials Budget
July
Aug
Sept
Quarter
Oct
Production Budget (units)
37,150
67,350
38,000
20,850
Materials requirement per unit
4
4
4
4
Materials needed for production
148600
269400
152000
83400
Add: budgeted ending inventory (50% of the next months materials requirements)
134700
76000
41700
Total materials requirements (in feet)
283300
345400
193700
Less: Beginning Inventory (Ending Inventory of Previous Month)
74300
134700
76000
Materials to be purchased
209000
210700
117700
537400
Raw material cost per foot
$0.60
$0.60
$0.60
$0.60
Budgeted Cost of Raw material purchases
$125,400
$126,420
$70,620
$322,440
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Pls ask separate question for remaining parts.
Sales Budget
July
August
September
Quarter
Expected Unit Sales
31,000
72,000
41,000
144,000
Unit Selling Price
$11
$11
$11
$11
Budgeted Sales in dollars
$341,000
$792,000
$451,000
$1,584,000