Question

In: Accounting

Milo Company manufactures beach umbrellas. The company is preparing detailed budgets for the third quarter and...

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):

July 40,500 October 30,500
August 91,000 November 17,000
September 60,000 December 17,500

The selling price of the beach umbrellas is $12 per unit.

All sales are on account. Based on past experience, sales are collected in the following pattern:

30% in the month of sale
65% in the month following sale
5% uncollectible

Sales for June totaled $480,000.

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

June 30 96,150 feet
September 30 ? feet

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 $52,890.

1.Calculate the estimated sales, by month and in total, for the third quarter.

July August September Quarter
Budgeted sales

2. Calculate the expected cash collections, by month and in total, for the third quarter​​

July August September Quarter
Total cash collections

3. Calculate the estimated quantity of beach umbrellas that need to be produced in July, August, September, and October.

July August September October
Required production in units

4&5 Calculate the quantity of Gilden (in feet) that needs to be purchased by month and in total, for the third quarter. Calculate the cost of the raw material (Gilden) purchases by month and in total, for the third quarter. (Round your Unit cost of raw materials to 2 decimal places.)

July August September Quarter
Total units of raw materials to be purchased
Cost of raw materials to be purchased

6. Calculate the expected cash disbursements for raw material (Gilden) purchases, by month and in total, for the third quarter.

July August September Quarter
Total cash disbursements

Solutions

Expert Solution

Milo Company
Sales
July 40500
August 91000
September 60000
October 30500
November 17000
December 17500
June Sales $ 480,000.00
Milo Company
Sales Budget
July August September Quarter
Budgeted unit Sales 40500 91000 60000 191500
Selling Price per unit $            12.00 $                12.00 $            12.00 $                12.00
Budgeted Sales $ 486,000.00 $ 1,092,000.00 $ 720,000.00 $ 2,298,000.00
Milo Company
Schedule of Expected Cash collection
July August September Quarter
Accounts receivable June 30th $ 312,000.00 $      312,000.00
July Sales $ 145,800.00 $      315,900.00 $      461,700.00
August Sales $      327,600.00 $ 709,800.00 $ 1,037,400.00
September Sales $ 216,000.00 $      216,000.00
Total Cash Collectons $ 457,800.00 $      643,500.00 $ 925,800.00 $ 2,027,100.00
Milo Company
Production Budget
July August September Quarter
Budgeted Unit sales 40500 91000 60000 191500
Ending Goods Inventory 13650 9000 4575 4575
Total Needs 54150 100000 64575 196075
Beginning Goods Inventory 6075 13650 9000 6075
Required Production 48075 86350 55575 190000
Milo Company
Direct Material Budget
July August September Quarter
Required Production 48075 86350 55575 190000
Gilden per unit(Feet) 4 4 4 4
Production needed 192300 345400 222300 760000
Ending Inventory 172700 111150 56950 56950
Total needed 365000 456550 279250 816950
Beginning Inventory 96150 172700 111150 96150
Material Needed 268850 283850 168100 720800
Cost Per feet $               0.60 $                   0.60 $               0.60 $                   0.60
Total material cost $ 161,310.00 $      170,310.00 $ 100,860.00 $      432,480.00
Working
October Required Production
Budgeted unit sales 30500
Ending goods Inventory 2550
Total Need 33050
Beginning Inventory 4575
Required Production 28475
Milo Company
Schedule of Expected Cash disbursement
July August September Quarter
Accounts Payable,June 30th $    52,890.00 $        52,890.00
July Purchases $    80,655.00 $        80,655.00 $      161,310.00
August Purchases $        85,155.00 $    85,155.00 $      170,310.00
September Purchases $    50,430.00 $        50,430.00
Total Cash Disbursements $ 133,545.00 $      165,810.00 $ 135,585.00 $      434,940.00

Related Solutions

Milo Company manufactures beach umbrellas. The company is preparing detailed budgets for the third quarter an...
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 a. The Marketing Department has estimated sales as follows for the remainder of the year (in units): 21,000 7,500 8,000 31,000 72,ee8 41,000 October July August September November December 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: 38%...
Milo Company manufactures beach umbrellas. The company is preparing detailed budgets for the third quarter and...
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): July 33,000 October 23,000 August 76,000 November 9,500 September 45,000 December 10,000 The selling price of the beach umbrellas is $15 per unit. All sales are on account. Based on past experience, sales are collected in the...
Milo Company manufactures beach umbrellas. The company is preparing detailed budgets for the third quarter and...
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): July 34,000 October 24,000 August 78,000 November 10,500 September 47,000 December 11,000 The selling price of the beach umbrellas is $11 per unit. All sales are on account. Based on past experience, sales are collected in the...
Milo Company manufactures beach umbrellas. The company is preparing detailed budgets for the third quarter and...
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:      a. The Marketing Department has estimated sales as follows for the remainder of the year (in units): The selling price of the beach umbrellas is $14 per unit.      July 38,500   October 28,500   August 87,000   November 15,000   September 56,000   December 15,500    b. All sales are on account. Based on past experience,...
Milo Company manufactures beach umbrellas. The company is preparing detailed budgets for the third quarter and...
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): July 36,000 October 26,000 August 82,000 November 12,500 September 51,000 December 13,000 The selling price of the beach umbrellas is $15 per unit. All sales are on account. Based on past experience, sales are collected in the...
Milo Company manufactures beach umbrellas. The company is preparing detailed budgets for the third quarter and...
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): July 41,000 October 31,000 August 92,000 November 17,500 September 61,000 December 18,000 The selling price of the beach umbrellas is $13 per unit. All sales are on account. Based on past experience, sales are collected in the...
Milo Company manufactures beach umbrellas. The company is preparing detailed budgets for the third quarter and...
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): July 30,000 October 20,000 August 70,000 November 10,000 September 50,000 December 10,000 The selling price of the beach umbrellas is $12 per unit. All sales are on account. Based on past experience, sales are collected in the...
Milo Company manufactures beach umbrellas. The company is preparing detailed budgets for the third quarter and...
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): July 38,500 October 28,500 August 87,000 November 15,000 September 56,000 December 15,500 The selling price of the beach umbrellas is $14 per unit. All sales are on account. Based on past experience, sales are collected in the...
Milo Company manufactures beach umbrellas. The company is preparing detailed budgets for the third quarter and...
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): The selling price of the beach umbrellas is $12 per unit. July 40,500 October 30,500 August 91,000 November 17,000 September 60,000 December 17,500 All sales are on account. Based on past experience, sales are collected in the...
Milo Company manufactures beach umbrellas. The company is preparing detailed budgets for the third quarter and...
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): July 41,500 October 31,500 August 93,000 November 18,000 September 62,000 December 18,500 The selling price of the beach umbrellas is $14 per unit. All sales are on account. Based on past experience, sales are collected in the...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT