5-12 Preparing a production budget (LO 3) High Flyers manufactures competition stunt kites. In November, Jerry Box prepared the following production budget for the first quarter of the coming year. Desired ending inventory is based on the following month's budgeted sales.

	January	February	March	Quarter
Budgeted sales	20,000	35,000	30,000	85,000
Desired ending inventory	7,000	6,000	2,400	2,400
Kites needed	27,000	41,000	32,400	87,400
Less beginning inventory	4,000	7,000	6,000	4,000
Budgeted production	23,000	34,000	26,400	83,400

Following higher-than-expected sales in December, Jerry conducted an inventory count on January 2 and discovered that the company had only 2,000 completed kites on hand. He decided that given the brisk sales in December, the company should increase its desired ending inventory level from 20 to 25% of the next month's sales volume.

Required

a.Prepare a new production budget for the first quarter.

b.What other components of the master budget will be affected by this change?