12. 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%, 25%, 25%, and 30%, respectively. The sales price is expected to be $30 per unit for the first two quarters and $40 per unit for the last two quarter. Sales in the first quarter of 2015 are expected to be 20% 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 1.5 pounds of raw materials at a cost of $10 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 2015 are 450,000 pounds. In addition, Ash Creek budgets 0.3 hours of direct labor per unit, labor costs at $10 per hour, and manufacturing overhead at $15 per direct labor hour. Its budgeted selling and administrative expenses for 2014 are $6,000,000. Instructions: (a) Prepare the sales, production, and direct materials budgets by quarters for 2014. Sales budget Q1 Expected unit sales Unit selling price Total sales Production budget Expected unit sales Ending finished goods units Beginning finished goods units Required production units Direct materials budget Units to be produced Direct materials per unit Total pounds needed for production Ending direct materials in pounds Beginning direct materials in pounds Direct materials purchases Cost per pounds Total cost of direct material purchases Q2 Q3 Q4 total Q1 Q2 Q3 Q4 (b) Calculate the budgeted total unit cost. Direct materials per unit Direct labor per unit Q1 Q2 Q3 Q4 3 $