Question

a. The Marketing Department has estimated sales as follows for the remainder of the year (in units): July 34,000 October August 78,000 November September 47,000 December 24,000 10,500 11,000 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: 30% in the month of sale 65% in the month following sale 5% uncollectible Sales for June totaled $297,000. c. 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. 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 September 30 8 1, 200 feet 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 Gilden during June will be $54,920.

Answer 1

Solutions:

Milo Company
Sales Budget
Particulars	July	August	September	Quarter
Budgeted Unit sales	34000	78000	47000	159000
Selling Price per unit	$11.00	$11.00	$11.00	$11.00
Budgeted Sales	$3,74,000	$8,58,000	$5,17,000	$17,49,000
Milo Company
Schedule of Expected Cash Collection for 3rd Quarter
Particulars	July	August	September	Quarter
Accounts receivables, June 30	$1,93,050			$1,93,050
July Sales	$1,12,200	$2,43,100		$3,55,300
August Sales		$2,57,400	$5,57,700	$8,15,100
September sales			$1,55,100	$1,55,100
Total Cash collection	$3,05,250	$5,00,500	$7,12,800	$15,18,550
Milo Company
Production Budget
Particulars	July	August	September	October
Budgeted unit sales	34000	78000	47000	24000
Add: Required ending Inventory (15% of Following month Sale)	11700	7050	3600	1575
Total Needs	45700	85050	50600	25575
Less: Opening Inventory	5100	11700	7050	3600
Required Production in units	40600	73350	43550	21975
Milo Company
Direct Materials Budget
Particulars	July	August	September	Quarter
Required Production in Units	40600	73350	43550	157500
Units of Raw materials needed per unit	4	4	4	4
Units of Raw materials needed to Meet production	162400	293400	174200	630000
Add: Required ending Inventory (50% of Following month Production Needs)	146700	87100	43950	43950
Total units of raw materials needed	309100	380500	218150	673950
Less: Opening Inventory of Gilden	81200	146700	87100	81200
Units of raw Materials to be Purchased	227900	233800	131050	592750
Milo Company
Cost of Direct Materials purchases Budget
Particulars	July	August	September	Quarter
Units of raw Materials to be Purchased	227900	233800	131050	592750
Unit cost of raw materials	$0.80	$0.80	$0.80	$0.80
Cost of Raw Material to be purchased	$1,82,320	$1,87,040	$1,04,840	$4,74,200
Milo Company
Schedule of expected cash disbursements
Particulars	July	August	September	Quarter
Accounts Payable, June 30	$54,920			$54,920
July Purchases	$91,160	$91,160		$1,82,320
August Purchases		$93,520	$93,520	$1,87,040
September Purchases			$52,420	$52,420
Total Cash disbursements	$1,46,080	$1,84,680	$1,45,940	$4,76,700