Oceanview Inc. will start producing "Bart Simpson Surfboards" in April. Production and sales for the first 4-month production run are budgeted as follows:

Month: Budgeted Production: Budgeted Sales:

April 4500 3000

May 4800 3600

June 5400 4800

July 5100 6000

Each unit requires $9 of direct materials. The company plans to have an ending inventory of materials each month equal to 40 percent of next month's production requirement. Seventy-five percent of material purchases are paid in the month of purchase and the remaining 25 percent in the following month.

Selling price of the product is $18 per unit. Thirty percent of sales are expected to be for cash. Thirty-five percent of sales are expected to be collected in the month of sale, and the remainder in the following month.

Required:

a. Prepare a material purchases budget for April, May, and June.

b. Determine the cash requirements for payment of material purchases for April, May, and June.

c. Determine the amount of cash that will be generated by sales in revenue in April, May, and June.