Reference no: EM132562845

Outhouse Limited manufactures and sells garden sheds for $1075. At the end of June, the following actual and expected sales numbers were provided:

Sales ( Units )

June 400

July 450

August 300

September 400

October 700

• Each shed requires 25 square metres of sheet metal at a cost of $24 per square metre, and requires three hours of direct labour to be manufactured. The direct labour cost is $18 per hour. The finished goods ending inventory for each month is required to be 30% of next month's forecast sales, while the raw materials ending inventory for each month is required to be 35% of the requirements for next month's budgeted production. Finished goods and raw materials inventories at the end of June are 150 units and 3,100 square metres respectively.
• The business collects 30% of receivables in the month of sale and the remainder in the following month. 65% of the cost of raw materials is paid in the month of purchase and the remainder in the following month. The amount owing for purchases at the beginning of July is $50,000.
• In addition to raw materials and direct labour, the business has the following monthly expenses: Variable selling expenses of 5% of sales; fixed administration expenses of $12,000 including depreciation of $2,000 and wages of $9,500; and factory overheads of $20,000 including depreciation of $5,000. The business pays all cash amounts owing for these expenses in the month incurred. Outhouse Limited had a cash at bank balance of $100,000 at the end of June.

Problem 1: Sales budget by month for the period June to September.

Problem 2: Schedule of cash collections by month for the period July to September.

Problem 3: Production budget by month for the period July to September.

Problem 4:  Direct materials budget for July and August.

Problem 5:  Direct labour budget for July and August.

Problem 6: Prepare the cash budget for July.