(Solution) - Soprano Co is in the process of preparing the second -(2025 Original AI-Free Solution)

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Soprano Co. is in the process of preparing the second quarter budget for 2010, and the following data have been assembled:
? The company sells a single product at a selling price of $40 per unit. The estimated sales volume for the next six months is as follows:

? 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 (i.e., accounts receivable less allowance for uncollectible accounts) will be $132,000 on March 31,
2010.
? Management?s policy is to maintain ending finished goods inventory each month at a level equal to 50% of the next month?s budgeted sales. The finished goods inventory on March 31, 2010, 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 is expected to be 10,200 pounds on March 31, 2010.
? The cost per pound of raw material is $6.00, 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, 2010.
Required:
a. Prepare a sales budget in units and dollars, by month and in total, for the second quarter (April, May, and June) of 2010.
b. Prepare a schedule of cash collections from sales, by month and in total, for the second quarter of 2010.
c. Prepare a production budget in units, by month and in total, for the second quarter of 2010.
d. Prepare a materials purchases budget in pounds, by month and in total, for the second quarter of 2010.
e. Prepare a schedule of cash payments for materials, by month and in total, for the second quarter of2010.