Crydon, Inc., manufactures an advanced swim fin for scuba divers. Management is

Question

Crydon, Inc., manufactures an advanced swim fin for scuba divers. Management is now preparing detailed budgets for the third quarter, July through September, and has assembled the following information to assist in preparing the budget:

   

  

The company maintains finished goods inventories equal to 8% of the following month’s sales. The inventory of finished goods on July 1 will be 464 pairs.

Each pair of swim fins requires 3 pounds of geico compound. To prevent shortages, the company would like the inventory of geico compound on hand at the end of each month to be equal to 20% of the following month’s production needs. The inventory of geico compound on hand on July 1 will be 3,528 pounds.

Geico compound costs $2.50 per pound. Crydon pays for 58% of its purchases in the month of purchase; the remainder is paid for in the following month. The accounts payable balance for geico compound purchases will be $10,800 on July 1.

Prepare a sales budget, by month and in total, for the third quarter.

        

Prepare a schedule of expected cash collections, by month and in total, for the third quarter.

           

      

Prepare a direct materials budget for geico compound, by month and in total, for the third quarter. (Do not round intermediate calculations.)

        

Prepare a schedule of expected cash disbursements for geico compound, by month and in total, for the third quarter. (Do not round intermediate calculations.)

       

Crydon, Inc., manufactures an advanced swim fin for scuba divers. Management is now preparing detailed budgets for the third quarter, July through September, and has assembled the following information to assist in preparing the budget:

Explanation / Answer

Solution.

1a. sales budget, by month and in total, for the third quarter.

1b. Schedule of expected cash collections, by month and in total, for the third quarter.

2. Production budget for each of the months July through Octobe

3a. Prepare a direct materials budget for geico compound, by month and in total, for the third quarter

3b. Schedule of expected cash disbursements for geico compound, by month and in total, for the third quarter

Sales Budget July August September October November December 92800 108,800 76,800 60,800 44,800 44,800

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