Ash Creek Company is preparing its master budget for 2014. Relevant data pertain

Question

Ash Creek Company is preparing its master budget for 2014. Relevant data pertaining to its sales, production, and direct materials budgets are as follows.

Sales: Sales for the year are expected to total 1,500,000 units. Quarterly sales are 20%, 26%, 23%, and 31%, respectively. The sales price is expected to be $39 per unit for the first three quarters and $44 per unit beginning in the fourth quarter. Sales in the first quarter of 2015 are expected to be 15% higher than the budgeted sales for the first quarter of 2014.

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 $11 per pound. Management desires to maintain raw materials inventories at 10% of the next quarter’s production requirements. Assume the production requirements for the first quarter of 2015 are 493,600 pounds.

Prepare the sales, production, and direct materials budgets by quarters for 2014. (Round answers to 0 decimal places, e.g. 5,275.)

ASH CREEK COMPANY
Sales Budget
For the Year Ending December 31, 2014

Quarter

1

2

3

4

Year

Expected unit sales

Unit selling price

Total sales

ASH CREEK COMPANY
Production Budget
For the Year Ending December 31, 2014

Quarter

1

2

3

4

Year

ASH CREEK COMPANY
Direct Materials Budget
For the Year Ending December 31, 2014

Quarter

1

2

3

4

Year

Open Show Work

ASH CREEK COMPANY
Sales Budget
For the Year Ending December 31, 2014

Quarter

1

2

3

4

Year

Expected unit sales

Unit selling price

$

$

$

$

Total sales

$

$

$

$

$

Explanation / Answer

Solution:

ASH CREEK COMPANY Sales Budget For the Year Ending December 31,2014 Quarter 1 2 3 4 Year Expected unit Sales                300,000                390,000                345,000                465,000            1,500,000 Unit Selling Price                           39                           39                           39                           44 Total Sales          11,700,000          15,210,000          13,455,000          20,460,000          60,825,000

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