Sales and production budgets Kapat Sealants, Inc. makes a roof sealer that it sells in 5-gallon cans for $45 per can. The company's budget committee is reviewing the budget for the next year. The sales manager has submitted a budget with a sales estimate of 3,600 units, divided into quarters as follows:

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REQUIRED First quarter. Second quarter Third quarter Fourth quarter 1,000 1,100 800 700 The production manager indicates that operating capacity is 900 units per quarter. To produce more than 900 units requires additional costs. Production cost is $30 per unit and there would be a 20 percent increase in cost for units in excess of 900 per quarter. The production manager is evaluated on the budgeted cost versus actual costs of production, while the sales manager is evaluated on the basis of actual sales revenue versus budgeted sales revenue. The sales manager claims that if he had only 900 units to sell in each of the first two quarters, the unsatisfied customers would switch to new products and sales in each of the last two quarters would be 50 units less than estimated. a. Prepare sales and production budgets to determine how production should be scheduled b. Resolve the conflict between the sales manager and the production manager.