Question

a) LimeLemon Inc. is a manufacturer of athletic wear for running and yoga. They sell premium athletic pants. LimeLemon Inc. has a March 30 year end. Estimated sales information for the upcoming fiscal year are as follows: Month Sales in Units Sales Price April 440 May June 520 480 510 300 $75/unit $75/unit $90/unit $85/unit $85/unit July August Prepare the sales budget for the first quarter. LimeLemon Inc. Sales Budget For the Quarter Ended June 30, 2019 April May June Period End b) When creating the budget, management likes to have extra inventory on hand in the event that actual sales are higher than budgeted. Management has determined that 20% of the following month's budgeted sales should be sufficient for the extra inventory. Ending inventory at March 31, 2019 was 100 units. Prepare the production budget for the first quarter. LimeLemon Inc. Production Budget For the Quarter Ended June 30, 2019 April May June Period End c) Each pair of pants requires 2.5 yards of fabric and each yard costs $12. Management budgets for extra materials in the event that there is a shortage from suppliers. Management would like to have 20% of the following month's production needs in ending inventory each month. Ending inventory of fabric at March 31, 2018 is 300 yards. Prepare the direct materials budget and purchasing budget for the first quarter.

Answer 1

Answer is given below

Sales Budget For the First Quarter April 440 May 1st Quarter 1,440 520 Expected Sales Units Unit Selling price Total Sales $75 $75 $39,000 June 480 $90 $43,200 $33,000 $115,200 Cash Sales Credit Sales Total Sales April $11,550 $21,450 $33,000 May $13,650 $25,350 $39,000 June $15,120 $28,080 $43,200 1st Quarter $40,320 $74,880 $115,200 Forecasted Cash sales and cash collections April May $11,550 $13,650 June $15,120 Cash Sales -35% 1st Quarter $40,320 $18,000 $12,870 March Sales (40% of $45,000) April Sales May Sales June Sales Total $8,580 $15,210 $10,140 $16,848 $42,108 $18,000 $21,450 $25,350 $16,848 $121,968 $42,420 $37,440 Production Budget June 1st Quarter July 510 440 1,440 102 Budgeted Sales Add: Desired Closing inventory Total Needed Less: Opening Inventory Production Units 104 544 1,542 100 1,442 102 468 444 486 July-Closing inventory 20% of 300 1st Quarter 1,442 Direct Material Purchase Budget April May Production Units 444 512 Multiply by: yards of fabric needed per unit 2.5 2.51 Direct material units needed for production 1,110 1,280 Add: Closing inventory of DM-20% 256 243 Total Material required 1,366 1,523 Less: Opening Inventory 300 256 Quantity to purchase 1,066 15 June 486 2.5 1,215 234 1,449 243 1,206 3,605 234 3,839 300 3,539 1,267 July-Closing inventory 20% of 1,170 Purchasing Budget April 1st Quarter 1,066 3,539 Purchase Quantity Cost per yard Budgeted Purchase May 1,267 $12 $15,204 June 1,206 $12 $14,472) $121 $12 $42,468 $12,792 June March Purchase April Purchase May Purchase June Purchase Total Cash disbursements Schedule of Cash disbursements April May $12,500 $6,396 $6,396 $7,602 1st Quarter $12,500 $12,792 $15,204 $7,236 $47,732 $7,602 $7,236 $14,838 $18,896 $13,998 LimeLemon Inc. Cash Budget April $11,300 $42,420 Opening balance Cash sales and cash collections May $10,224 $37,440 June $4,366 $42,108 1st Quarter $11,300 $121,968 $53,720 $47,664 $46,474 $133,268 $14,838 $12,500 Total cash available payments for Cash payment to vendors Operating expenses Purchase of equipment Dividend Total cash disbursements Preliminary cash balance Financing Borrowing Repayment (at end of the month) Total $18,896 $15,600 $8,000 $1,000 $43,496 $10,224 $13,998 $14,300 $30,000 $1,000 $59,298 -$11,634 $47,732 $42,400 $38,000 $3,000 $131,132 $2,136 $1,000 $28,338 $18,136 $16,000 -$14,000 $14,000 $16,000 -$14,000 $2,000 $0 $16,000 Ending Cash balance $10,224 $4,366 $4,136 $4,136