Milo Company manufactures beach umbrellas. The company is preparing detailed budgets for the month of August and has assembled the following information to assist in the budget preparation: • Budgeted sales units are 30,000 (July), 70,000 (August), 50,000 (September) and 20,000 (October) Selling price per unit: $15 Cash collections: 40% in the month of sale. 55% in the month following the sale. 5% are uncollectible. The company maintains finished goods inventories equal to 20% of the following month's sales. Each beach umbrella requires 5 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 (number of units that should be produced next month) Raw material cost is $O.80 per foot of Gilden. The beginning balance of raw materials for August will be 134,000 feet of Gilden. 60% 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 balance on August 1 for purchases of Gilden during July will be $82,400 1. What is the August sales budget in dollars? 2. How much money will Milo collect during the month of August? 3. How many units should be produced in the month of August?
Milo Company manufactures beach umbrellas. The company is preparing detailed budgets for the month of August and has assembled the following information to assist in the budget preparation: • Budgeted sales units are 30,000 (July), 70,000 (August), 50,000 (September) and 20,000 (October) Selling price per unit: $15 Cash collections: 40% in the month of sale. 55% in the month following the sale. 5% are uncollectible. The company maintains finished goods inventories equal to 20% of the following month's sales. Each beach umbrella requires 5 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 (number of units that should be produced next month) Raw material cost is $O.80 per foot of Gilden. The beginning balance of raw materials for August will be 134,000 feet of Gilden. 60% 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 balance on August 1 for purchases of Gilden during July will be $82,400 1. What is the August sales budget in dollars? 2. How much money will Milo collect during the month of August? 3. How many units should be produced in the month of August?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
Milo Company manufactures beach umbrellas. The company is preparing detailed budgets for the month of
August and has assembled the following information to assist in the budget preparation:
• Budgeted sales units are 30,000 (July), 70,000 (August), 50,000 (September) and 20,000 (October)
Selling price per unit: $15
Cash collections: 40% in the month of sale. 55% in the month following the sale. 5% are
uncollectible.
The company maintains finished goods inventories equal to 20% of the following month's sales.
Each beach umbrella requires 5 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 (number of units that should be produced next month)
Raw material cost is $O.80 per foot of Gilden.
The beginning balance of raw materials for August will be 134,000 feet of Gilden.
60% 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 balance on August 1 for purchases of Gilden during July will be $82,400
1. What is the August sales budget in dollars?
2. How much money will Milo collect during the month of August?
3. How many units should be produced in the month of August?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education