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Integration of sales, production, and direct materials budgets

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Crydon Inc manufactures an advanced swim fin for scuba divers. Management is now preparing detailed budgets for the third quarter, July through September, and has assembled the following information to assist in preparing the budget:

a. The marketing department has estimated sales as follows for the remainder of the year (in pairs of swim fins):

The selling price of the swim fins is $50 per pair

July 6,000 October 4,000
August 7,000 November 3,000
September 5,000 December 3,000

b. All sales are on account. Based on past experience , sales are expected to be collected in the following pattern;
40% in the month of sale
50% in the month following sale
10% uncollectible

The beginning accounts receivable balance (excluding uncollectible amounts) on July 1 will be $130,000

c. The company maintains finished good inventories equal to 10% of the following month's sales. the inventory of finished goods on July 1 will be 600 pairs.

d. Each pair of swim fins require 2 pounds of geico compound. To prevent shortages , the company would like the inventory of geico compound on hand at the end of each month to be equal to 20%of the following month's production needs. The inventory of geico compound on hand on July 1 will be 2,440 pounds.

e. Geico compound costs $2.50 per pound. Crydon pays for 60% of its purchases in the month of purchase; the remainder is paid for int he following month . The accounts payable balance for geico compound purchases will be $11,400 on July1.


1. Prepare a sales budget, by month and in total , for the third quarter. (Show your budget in both pairs of swim fins and dollars). Also prepare a schedule of expected cash collections , by month and in total , for the third quarter.

2. Prepare a production budget for each of the months July through October.

3. Prepare a direct materials budget for geico compound, by month and in total, for the third quarter. Also prepare a schedule of expected cash disbursements for geico compound , by month and in total, for the third quarter.

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Dear student,

Solution is provided in a separate excel file attached .It contains five statements covering the requirements ...

Solution Summary

The three budgets i.e. sales budget, Production budget and Material purchase budget are integrated in the proper sequence so that student can understand the step by step preparation of these budgets. Necessary explanatory notes are provided at the end so as to enable students to understand how beginning and ending inventory figures are worked out for each month of production and Purchase budgets.

Schedule of cash collection and cash disbursement shows clear and detailed calculation of month wise figures and quarter totals.

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Please see ** ATTACHED ** Scenario for complete details!!

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Service Request SR-rm-004
Analyze HR System

Organization: Riordan Manufacturing
Locations: All Plant Locations
Requester: Hugh McCauley, COO

Description of Request:
Analyze the HR system to integrate the existing variety of tools in use today into a single integrated application.

Background of Request:
We would like to take advantage of a more sophisticated, state-of-the art, information systems technology in our Human Resources department.

Expected Results/Impact when completed:
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Riordan Manufacturing, Inc. is an industry leader in the field of plastic injection molding. With state-of-the art design capabilities, we create innovative plastic designs that have earned international acclaim. Attention to detail, extreme precision and enthusiastic quality control are the hallmarks of Riordan Manufacturing. With facilities in San Jose, California, Albany, Georgia, Pontiac, Michigan and Hangzhou, China, we have the capacity to fulfill your unique needs. Riordan Manufacturing is wholly owned by Riordan Industries, a Fortune 1000 enterprise.

Some of our products ...
? Plastic Bottles
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The firm is attempting to consolidate customer information to deliver better value to the customer. The firm has historical records in many disparate databases, as well as in paper files and microfiche. Below is a listing of information the firm has available to consolidate into a CRM system.
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Files of Past Marketing Research, Marketing Plans, and Design Awards
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Sales Database
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? Literature and other collateral material

Marketing Research expenditures include:
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Marketing Budget Anticipated Results
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