Royal company is preparing budgets for the quarter

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Royal Company is preparing budgets for the quarter ending June 30th. Budgeted sales for the next five months are: April 20,000 units May 50,000 units June 30,000 units July 25,000 units August 15,000 units The selling price is $10 per unit.
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8-12 The Sales Budget The individual months of April, May, and June are  summed to obtain the total budgeted sales in units  and dollars for the quarter ended June 30th
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8-13 Expected Cash Collections All sales are on account. Royal’s collection pattern is: 70% collected in the month of sale, 25% collected in the month following sale, 5% uncollectible. In April, the March 31st accounts receivable balance of $30,000 will be collected in full.
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8-14 Expected Cash Collections
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8-15 Expected Cash Collections From the Sales Budget for April.
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8-16 Expected Cash Collections From the Sales Budget for May.
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8-17 Expected Cash Collections
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8-18 The Production Budget Production Budget Sales Budget and Expected Cash Collections Completed The production budget must be adequate to meet budgeted sales and to provide for the desired ending inventory.
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8-19 The Production Budget The management at Royal Company wants ending inventory to be equal to 20% of the following month’s budgeted sales in units. On March 31st, 4,000 units were on hand. Let’s prepare the production budget.
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8-20 The Production Budget
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8-21 The Production Budget March 31 ending inventory. Budgeted May sales 50,000 Desired ending inventory % 20% Desired ending inventory 10,000
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8-22 The Production Budget
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8-23 The Production Budget Assumed ending inventory.
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8-24 The Direct Materials Budget At Royal Company, five pounds of material are required per unit of product. Management wants materials on hand at the end of each month equal to 10% of the following month’s production. On March 31, 13,000 pounds of material are on hand. Material cost is $0.40 per pound. Let’s prepare the direct materials budget.
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8-25 The Direct Materials Budget From production budget.
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8-26 The Direct Materials Budget
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8-27 The Direct Materials Budget Calculate the materials to be purchased in May. March 31 inventory. 10% of following month’s production needs.
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8-28 The Direct Materials Budget
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8-29 The Direct Materials Budget Assumed ending inventory.
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8-30 Expected Cash Disbursement for  Materials Royal pays $0.40 per pound for its materials. One-half of a month’s purchases is paid for in the month of purchase; the other half is paid in the following month. The March 31 accounts payable balance is $12,000. Let’s calculate expected cash disbursements.
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