Question

Problem 8-30 Integration of the Sales, Production, and Direct Materials Budgets [LO8-2, LO8-3, L08-4] 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 July August October 31,500 93,000 November18,000 September62,000 December18,s00 41,500 E The selling price of the beach umbrellas is $14 per unit b. All sales are on account. Based on past experience, sales are collected in the following pattern 30 in the month of sale in the month following 658 sale 58 uncollectible Sales for June totaled $588,000. c. The company maintains finished goods inventories equal to 15% of the following month's sales. This requirement wil be met at the end of June d. 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 98,450 feet September 30 ? feet e. Gilden costs $0.80 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 Glden during June will be $72,920 Required: 1 Calculate the estimated sales, by month and in total, for the third quarter 2. Calculate the expected cash collections, by month and in total, for the third quarter. 3. Calculate the estimated quantity of beach umbrellas that need to be produced in July, August, September, and October 4. Calculate the quantity of Gilden (in feet) that needs to be purchased by month and in total, for the third quarter 5. Calculate the cost of the raw material (Gilden) purchases by month and in total, for the third quarter 6. Calculate the expected cash disbursements for raw material (Gilden) purchases, by month and in total, for the third quarter

What is the answer to #6?

Answer 1

Cash Disbursements for R.M
Particulars			July	August	September	Total
Total cost of R.M			$ 220,120.00	$ 233,240.00	$ 139,040.00
Payment for the month of:
June			$    72,920.00
July			$ 110,060.00	$ 110,060.00
August				$ 116,620.00	$ 116,620.00
September					$    69,520.00
			$ 182,980.00	$ 226,680.00	$ 186,140.00	$ 595,800.00

Workings:

	Production Budget
	Particulars			July	August	September	October	November	December
	Sales			41500	93000	62000	31500	18000	18500
Add:	Desired Ending Inventory			13950	9300	4725	2700	2775
Less:	Beginning Inventory			6225	13950	9300	4725	2700
	Production Required			49225	88350	57425	29475	18075

Raw Materials Budget
Particulars			July	August	September	October	November
Production Required			49225	88350	57425	29475	18075
R.M req. per unit			4	4	4	4	4
Total production need			196900	353400	229700	117900	72300
Desired ending inventory			176700	114850	58950	36150
Beginning inventory			98450	176700	114850	58950
Net R.M req. to be purchased			275150	291550	173800	95100
Cost per foot			$             0.80	$             0.80	$             0.80	$           0.80
Total cost of R.M			$ 220,120.00	$ 233,240.00	$ 139,040.00	$ 76,080.00