Question 3 (25 points) ABC Inc is preparing budgets for the month of June * Budgeted sales of the company's only product for the next five months are: April... 30,000 units May...... 35,000 units June...... 40,000 units July....... 30,000 units August.. 35,000 units The selling price is $40 per unit. All sales are on account. * The company collects 40% of these credit sales in the month of the sale; 30% are collected in the month following sale; and the remaining 30% are collected in the 2" month following the month of sale. The company desires to have inventory on hand at the end of each month equal to 20% of the following month's budgeted unit sales. * 4 pounds of material are required per unit of product. * Management desires to have materials on hand at the end of each month equal to 10% of the following month's production needs. * The material costs $4.00 per pound. * 20% of a month's purchases are paid for in the month of purchase; the other 80% is paid for in the following month. * Each unit produced requires 0.2 hours of direct labor. * Each hour of direct labor costs the company $15. * Variable manufacturing overhead is $10 per direct labor-hour. * Fixed manufacturing overhead is $30,500 per month. This includes $10,500 in depreciation, which is not a cash outflow. Prepare the following for the month of June: 1. Sales budget Cash Collection in June. Accounts Receivables as of June 30% Production Budget Direct Materials Budget Labor Budget 2. a 4 5. Cash Payments for Direct Material in June and Accounts Payable as of June 30th 6 7. Manufacturing Overhead Budget 8 Cash Budget