Chapter 9 50 MARKS Pearson's Inc is preparing its budget for the third quarter of 2022 (July to September). The company has gathered information from its managers in preparation of the budgeting process. Sales Unit sales for May 2021 112,500 Unit sales for June 2021 102, 100 Expected unit sales for July 2021 113,000 Expected unit sales for August 2021 112,500 Expected unit sales for September 2021 116,000 Expected unit sales for October 2021 125,000 Expected unit sales for November 2021 137,500 Unit selling price $12 Production The company likes to keep 10% of the next month's unit sales in ending inventory. Cash Collections All sales are on account. 85% of the Accounts Receivable are collected in the month of sale, and 15% of the Accounts Receivable are collected in the month after sale. Accounts receivable on June 30, 2021, totaled $183,780.Direct Materials Direct materials cost $i}.T5 per pound. Two pounds of direct materials are required to produce each unit. Pearson's Inc likes to keep 5% of the materials needed forthe next month in its ending inventory. Raw Materials on June 3i}. 221 totaled 11,295 pounds. Desired ending direct materials on September 3t], 2021 is 12,625 pounds. W Payment for materials is made within 15 days. 51% is paid in the month of purchase. and SITE: is paid in the month after purchase. Accounts Payable on June 3G. 221. totaled $120.595. Direct Labor Labor requires 12 minutes per unit for completion and is paid at a rate of $3 per hour. Manufacturing Overhead Indirect materials 30 per labor hour Indirect labor 50g per labor hour Utilities 45e per labor hour Maintenance 25e per labor hour Salaries $42,000 per month Depreciation $16,800 per month Property taxes $ 2,675 per month Insurance $ 1,200 per month Janitorial $ 1,300 per month Selling and Administrative Variable selling and administrative cost per unit is $1.60. Fixed selling and administrative costs are as follows: Advertising $15,000 a month Insurance $ 1,400 a month Salaries $72,000 a month Depreciation $ 2,500 a month Other fixed costs $ 3,000 a monthRequired: For the third quarter of 222 {Julyr to September]1 prepare the following in proper form [by month}: a} Sales budget. 3 Marks b} Production budget. 6 Marks c) Direct materials budget. [Ftound to nearest dollar] 3 Marks d} Direct labor budget. [For calculations. round to the nearest hour) 5 Marks e} Manufacturing overhead budget. (Round amounts to the nearest dollar} 9 Marks t} Selling and administrative budget. 5 Marks g} Schedule for expected cash collections from customers. 6 Marks h} Schedule for expected payments for materials purchases. [Round totals to nearest dollar) 5 Marks Totals by quarter are not necessary