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Question - Prepare the Sales, Production and Direct Materials Budgets by Quarter for the next financial year for Company ABC using the data provided here.
Sales: Sales for the year are expected to total 1,200,000 units. Quarterly sales are 20%, 25%, 30%, and 25% respectively.
The sales price is expected to be $50 per unit for the first three quarters and $55 per unit beginning in the fourth quarter. Sales in the first quarter of 2017 are expected to be 10% higher than the budgeted sales for the first quarter of 2016.
Production: Management desires to maintain ending finished goods inventories at 25% of next quarter's budgeted sales volume.
Direct materials: Each unit requires 3 kg of raw materials at a cost of $5 per kg. Management desires to maintain raw materials inventories at 5% of the next quarter's production requirements. Assume the production requirements for the first quarter of 2017 are 810,000 kilograms.
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