Question

SarasotaCompany is preparing its master budget for 2017. Relevant data pertaining to its sales, production, and direct materials budgets are as follows. Sales. Sales for the year are expected to total 1,200,000 units. Quarterly sales are 18%, 25%, 23%, and 34%, respectively. The sales price is expected to be $38 per unit for the first three quarters and $47 per unit beginning in the fourth quarter. Sales in the first quarter of 2018 are expected to be 10% higher than the budgeted sales for the first quarter of 2017. Production Management desires to maintain the ending finished goods inventories at 25% of the next quarter's budgeted sales volume. Direct materials. Each unit requires 2 pounds of raw materials at a cost of $12 per pound. Management desires to maintain raw materials inventories at 10% of the next quarter's production requirements. Assume the production requirements for first quarter of 2018 are 500,000 pounds. - Your answer is partially correct. Prepare the sales budget by quarters for 2017. SARASOTA COMPANY Sales Budget For the Year Ending December 31, 2017 Quarter Year Expected unit sales Unit selling price | | Total sales

Answer 1

SARASOTA COMPANY
Sales Budget
For the year ending December 31, 2017
	Quarter
	1	2	3	4	Year
Expected Unit Sales	216000	3000000	276000	408000	1200000
Unit Selling Price	$38	$38	$38	$47
Total Sales	$8208000	$11400000	$10488000	$19176000	$49272000

Expected Unit Sales:

1 = 1200000 * 18% = 216000

2 = 1200000 * 25% = 300000

3 = 1200000 * 23% = 276000

4 = 1200000 * 34% = 408000

SARASOTA COMPANY
Production Budget
For the year ending December 31, 2017
	Quarter
	1	2	3	4	Year
Expected Unit Sales	216000	3000000	276000	408000
Add: Desired Ending finished goods inventory	75000	69000	102000	59400
Total required Units	291000	369000	378000	467400
Less: Beginning Finished goods inventory	54000	75000	69000	102000
Required production units	237000	294000	309000	365400	1205400

Desired Ending finished goods inventory:

1 = 300000 * 25% = 75000

2 = 276000 * 25% = 69000

3 = 408000 * 25% = 102000

4 = (216000 * 110%) * 25% = 59400

Beginning Finished goods inventory:

1 = 216000 * 25% = 54000

SARASOTA COMPANY
Direct Materials Budget
For the year ending December 31, 2017
	Quarter
	1	2	3	4	Year
Units to be produced	237000	294000	309000	365400
Direct Materials per unit	2	2	2	2
Total Pounds required for production	474000	588000	618000	730800
Add: Desired Ending Direct materials	58800	61800	73080	50000
Total Materials Required	532800	649800	691080	780800
Less: Beginning Direct Materials	47400	58800	61800	73080
Direct Material Purchases	485400	591000	629280	707720
Cost per Pound	$12	$12	$12	$12
Total Cost of Direct Material Purchases	$5824800	$7092000	$7551360	$8492640	$28960800

Desired Ending Direct materials:

1 = 588000 * 10% = 58800

2 = 618000 * 10% = 61800

3 = 730800 * 10% = 73080

4 = 500000 * 10% = 50000

Beginning Direct Materials:

1 = 474000 * 10% = 47400