1. Soriano Company is preparing its master budget for the year. 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 as a percentage of total 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.

Production. Management desires to maintain the ending finished goods inventories at 25% of the next quarters budgeted sales volume. Beginning balance in finished goods is 60,000 units.

Direct Materials. Each unit requires 3 pounds of raw materials at a cost of $5 per pound. Management would like to maintain raw materials inventories at 5% of the next quarters production requirements. Soriano had 38,250 lbs. of direct materials on hand at the beginning of this year.

a. Prepare the per-quarter sales budget for the year.

b. Soriano expects 90% of the sales to be made on account and the rest will be cash sales. Typical collection of cash for its accounts receivable is as follows: 80% in the quarter the sales are made and 20% in quarter following the sale. How much cash is budgeted to be collected in Q2?

c. Prepare the production budgets for Q1 and Q2 of the year.

d. Prepare the direct materials budget for Q1. What is the total cost of these purchases?