Question

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 34,000 August 78,000 September 47,000 October 24,000 November 10,500 December 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:

Answer 1

Solution:

(1) Calculation of Estimated Sales for the third quarter:

(2) Calculation of expected cash collection for the third quarter:

(3) Calculation of the estimated quantity of beach umbrellas that need to be produced in July, August, September and October:

(4) Calculation of the quantity of Gilden (in Feet) need to be purchased for the third quarter:

Note: In this question, Estimated sales of Umbrellas in January month is not given. Hence estimated quantity needed to be purchased cannot be calculated.

In this question, the student did not mention how many sub-parts need to be solved. Hence as HOMEWORKLIB code of conduct, I am solving only initial 4 sub-parts.