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June. Practice Question on Budgeting Q1. Soprano Co. is in the process of preparing the second quarter budget for 2020 and the following data have been assembled: The company sells a single product at a selling price of 40 per unit. The estimated sale volume for the next six months is as follows: March 6000 units .8000 units April 7000 units July 9000 units May .10,000 units August. 6000 units All sales are on account. The company's collection experience has been that 40% of a month's sales are collected in the month of sale, 55% are collected in the month following the sale, and 5% are uncollectible. It is expected that the net realizable value of accounts receivable. (.c.. accounts receivables less allowance for uncollectible accounts) will be $132,000 on March 31, 2020. Management's policy is to maintain ending finished goods inventory cach month at a level equal to 50% of the next month's budgeted sales. The finished goods inventory on March 31, 2020, is expected to be 3.500 units. To make one unit of finished product, 3 pounds of materials are required. Management's policy is to have enough materials on hand at the end of each month to equal 40% of the next month's estimated usage. The raw materials inventory to be 10,200 pounds on March 31, 2020. The cost per pound raw material is 6 and 80% of all purchases are paid for in the month of purchase; the remainder is paid in the following month. The accounts payable balance for raw material purchases is expected to be $26,280 on March 31, 2020 Required: 2. Prepare a sales budget in units and dollars, by month and in total, for the second quarter (April, May and June) of 2020. Prepare a schedule of cash collections from sales, by month and in total, for the second quarter of 2020. . Prepare a production budget in units, by month and in total, for the second quarter of 2020 4. Prepare a materials purchases budget in pounds, by month and in total, for the second quarter of 2020. Prepare a schedule of cash payments for materials by month and total for the second quarter of 2020. Q2 Freese Inc., is in the process of preparing the fourth quarter budget for 2020, and the following data have been assembled: The company sells a single product at a price of $60 per unit. The estimated sales volume for the next six months is as follows: September .13.000 units October... L.12.000 units November.. 14,000 units December 20,000 units January.. ..9,000 units February ..10,000 units All sales are on account. The company's collection experience has been that 32% of a month's sales are collected in the month of sales, 64% are collected in the month following the sale, and 4% are uncollectible. It is expected that the net realizable value of accounts receivables (.e., accounts receivables less allowance for uncollectible accounts) will be $ 499,200 on September 30, 2020 Management's policy is to maintain ending finished goods inventory each month at a level equal to 40% of the next month's budgeted sales. The finished goods inventory on September 30, 2020 is expected to be 4,800. To make one unit of finished product, 5 pounds of materials are required. Management's policy is to have enough materials on hand at the end of each month to equal 30% of the next month's estimated usage. The raw materials inventory is expected to be 19.200 pounds on September 30, 2020. The coat per pound of raw materials is $4 and 70% of all purchases are paid for in the month of purchase the remainder is paid in the following month. The accounts payable for raw material purchases is expected to be $75,960 on September 30, 2020. Required: . Prepare a sales budget in units and dollars, by month and in total for the fourth quarter (October, November and December) of 2020 Prepare a schedule of cash collections from sales by month and in total for the fourth quarter of 2020. Prepare a production budget in units, by month and in total for the fourth quarter of 2020. 4. Prepare a materials purchases budget in pounds, by month and in total, for the fourth quarter of 2020 Prepare a schedule of cash payments for materials by month and in total for the fourth quarter of 2020

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