In: Accounting
Water Sport Inc. manufactures a small personal water tube used for children learning to swim. Management is now preparing 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):
July | 8,400 | October | 4,800 |
August | 6,900 | November | 4,400 |
September | 5,900 | December | 3,900 |
The selling price of the water tubes is $50.
b. All sales are on account. Based on past experience, sales are
expected to be collected in the following pattern:
50 | % | in the month of sale |
45 | % | in the month following sale |
5 | % | uncollectible |
The beginning accounts receivable balance (excluding uncollectible amounts) on July 1 will be $169,500.
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.) Also prepare a schedule of expected cash
collections, by month and in total, for the third quarter.
2. Prepare a production budget for each of the months July through October.
3. Prepare a direct materials purchases budget for synthetic rubber compound, by month and in total, for the third quarter. Also prepare a schedule of expected cash disbursements for synthetic rubber compound, by month and in total, for the third quarter.