**Budgeting for Milo Company: Beach Umbrellas****Overview:**Milo Company manufactures beach umbrellas and is preparing budgets for the third quarter. Key data and tasks for planning sales, production, and material requirements are outlined below.**Sales Estimates:**- **Unit Sales Projections:** - July: 36,000 - August: 82,000 - September: 51,000 - October: 26,000 - November: 12,500 - December: 13,000- **Selling Price:** $15 per unit**Sales Collection Pattern:**- 30% collected in the month of sale- 65% collected in the month following sale- 5% considered uncollectible*Example:* Sales for June totaled $465,000.**Inventory Policy:**- Finished goods inventory is 15% of the following month's sales. This is ensured by the end of June.**Material Requirements:**- Each umbrella requires 4 feet of Gilden material.- Ending inventory of Gilden: 50% of the following month's production needs.- Inventory on hand: - June 30: 85,800 feet - September 30: To be calculated**Material Cost:**- Gilden costs $0.60 per foot.- Payment for Gilden purchases is split: half paid in the purchase month and half the following month.- Accounts payable on July 1 for June purchases: $44,790.**Tasks:**1. **Estimated Sales Calculations:** - Calculate estimated sales by month and total for the third quarter.2. **Expected Cash Collections:** - Determine expected cash collections by month and in total for the third quarter.3. **Production Quantities:** - Estimate umbrellas to be produced in July, August, September, and October.4. **Material Purchases:** - Calculate Gilden needed (in feet) by month and total for the third quarter.5. **Material Costing:** - Determine cost for Gilden purchases by month and total for the third quarter.6. **Cash Disbursements:** - Calculate expected cash disbursements for Gilden purchases by month and total for the third quarter.**Data Entry:**- Use provided tables and tabs to input calculations and analyze budget projections. Focus on the third quarter: **Educational Exercise Overview**This section focuses on financial and production calculations for the third quarter. It includes a series of tasks to help understand cash flow, production requirements, and material cost estimations over a specified period.**Tasks:**1. **Estimated Sales Calculation:** - Calculate the estimated sales, by month and in total, for the third quarter.2. **Cash Collections Estimation:** - Calculate the expected cash collections, by month and in total, for the third quarter.3. **Production Quantity Estimation:** - Calculate the estimated quantity of beach umbrellas that need to be produced in July, August, September, and October.4. **Material Quantity Calculation:** - Calculate the quantity of Gilden (in feet) that needs to be purchased by month and in total, for the third quarter.5. **Material Cost Estimation:** - Calculate the cost of the raw material (Gilden) purchases, by month and in total, for the third quarter.6. **Cash Disbursements for Material:** - Calculate the expected cash disbursements for raw material (Gilden) purchases, by month and in total, for the third quarter.**Interactive Component:**- **Assessment Tool IFrame:** Complete this question by entering your answers in the tabs provided below.**Answer Tabs:**- **Tabs include sections labeled:** - Required 1, Required 2, Required 3, Required 4 and 5, Required 6**Detailed Explanation of the Table:**- **Table Heading:** Calculate the expected cash collections, by month and in total, for the third quarter.- **Columns Represent:** - Months: July, August, September - Quarter Total- **Row:** Total cash collections input fields are provided for each month and for the quarter total.**Navigation:**- **Button Navigation:** - Required 1, Required 3 (acts as a part of user flow control to guide inputs step-by-step) This interactive exercise helps provide a practical understanding of budgeting and financial forecasting within a real-world production context.

Budgeting is a method of estimating expected future outcomes based on past events. Budgeting schedules for sales, collections, purchases and payments are estimated based on past performance.This helps an organization to plan the cash budget and financials for later periods.Companies can put restrictions on certain expenses to avoid over-budgeting.Utilizing it companies can make borrowing decisions.Working Note June July August September October November December Sales (in Units) 36,000 82,000 51,000 26,000 12,500 13,000Selling Price per Unit $ 15.00 $ 15.00 $ 15.00 $ 15.00 $ 15.00 $ 15.00Total Sales $465,000 $ 540,000 $1,230,000 $ 765,000 $ 390,000 $ 187,500 $ 195,000Credit Collections:In the Month of Sale30% $ 162,000 $ 369,000 $ 229,500 $ 117,000 $ 56,250 $ 58,500In the Following Month65% $ 302,250 $ 351,000 $ 799,500 $ 497,250 $ 253,500 $ 121,875Uncollectible5% $ 27,000 $ 61,500 $ 38,250 $ 19,500 $ 9,375 $ 9,750Ending Finished Goods Inventory15% 12,300 7,650 3,900 1,875 1,950Beginning Finished Goods Inventory 5,400 12,300 7,650 3,900 1,875 1,950Production 42,900 77,350 47,250 23,975 12,575Each Umbrella Requires4 Feet 171,600 309,400 189,000 95,900 50,300Ending Raw Material Inventory50% 154,700 94,500 47,950 25,150 Beginning Raw Material Inventory 85,800 154,700 94,500 47,950 25,150 Purchases 240,500 249,200 142,450 73,100Gilden Cost $ 0.60 $ 144,300 $ 149,520 $ 85,470 $ 43,860Credit Payments:In the Month of Purchase50% $ 72,150 $ 74,760 $ 42,735 $ 21,930In the Following Month50% $ 44,790 $ 72,150 $ 74,760 $ 42,735 $ 21,9301a. Estimated Sales -Estimated Sales July August September Quarter Sales (in Units) 36,000 82,000 51,000 169,000Selling Price per Unit $ 15.00 $ 15.00 $ 15.00 $ 15.00Budgeted Sales $ 540,000 $ 1,230,000 $ 765,000 $ 2,535,0002a. Expected Cash Collections -Expected Cash Collections July August September Quarter June Sales $ 302,250 $ 302,250July Sales $ 162,000 $ 351,000 $ 513,000August Sales $ 369,000 $ 799,500 $ 1,168,500September Sales $ 229,500 $ 229,500Total Collections $ 464,250 $ 720,000 $ 1,029,000 $ 2,213,2503a. Estimated Production -Estimated Production July August September Quarter Sales (in Units) 36,000 82,000 51,000 169,000Add: Ending Finished Goods Inventory 12,300 7,650 3,900 3,900Total Needs 48,300 89,650 54,900 172,900Less: Beginning Finished Goods Inventory 5,400 12,300 7,650 5,400Total Production 42,900 77,350 47,250 167,5004a. Quantity of Gilden (in Feet) that needs to be Purchase -Quantity of Gilden (in Feet) that needs to be Purchase July August September Quarter Production 42,900 77,350 47,250 167,500Each Umbrella Requires (In Feet) 4 4 4 4Total Required Purchase 171,600 309,400 189,000 670,000Add: Ending Raw Material Inventory 154,700 94,500 47,950 47,950Total Needs 326,300 403,900 236,950 717,950Less: Beginning Raw Material Inventory 85,800 154,700 94,500 85,800Raw Material (Gilden) Purchase 240,500 249,200 142,450 632,1505a. Cost of Raw Material (Gilden) Purchase by Month and in Total -Cost of Raw Material (Gilden) Purchase by Month and in Total July August September Quarter Gilden Purchases 240,500 249,200 142,450 632,150GildenCost per Foot $ 0.80 $ 0.80 $ 0.80 $ 0.80Total Cost of Raw Material (Gilden) 192,400 199,360 113,960 505,7206a. Expected Cash Disbursements -Expected Cash Disbursements July August September Quarter June Purchases $ 44,790 $ 44,790July Purchases $ 72,150 $ 72,150 $ 144,300August Purchases $ 74,760 $ 74,760 $ 149,520September Purchases $ 42,735 $ 42,735Total Cash Disbursements $ 116,940 $ 146,910 $ 117,495 $ 381,345