**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…

Milo Company manufactures beach umbrellas. The company is preparing budgets for the third quarter and assembled the following information: a. The Marketing Department estimated unit sales as follows for the remainder of the year: 36,000 October 26,000 82,000 November 12,500 13,000 July August September 51,000 December The selling price of the beach umbrellas is $15 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 $465,000. 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 ending inventory of Gilden 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 85,800 feet ? feet e. Gilden costs $0.60 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 $44,790. 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.

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q