6-32 Revenue and production budgets. (CPA, adapted) The Sabat Corporation manufactures and sells two products: Thingone and Thingtwo. In July 2013, Sabats budget department gathered the following data to prepare budgets for 2014:

2014 Projected Sales Product Units Price Thingone 62,000 $172 Thingtwo 46,000 $264 2014 Inventories in Units Expected Target Product January 1, 2014 December 31, 2014 Thingone 21,000 26,000 Thingtwo 13,000 14,000 The following direct materials are used in the two products: Amount Used per Unit Direct Material Unit Thingone Thingtwo A pound 5 6 B pound 3 4 C each 0 2 Projected data for 2014 for direct materials are: Direct Material Anticipated Purchase Price Expected Inventories January 1, 2014 Target Inventories December 31, 2014 A $11 37,000 lb. 40,000 lb. B 6 32,000 lb. 35,000 lb. C 5 10,000 units 12,000 units Projected direct manufacturing labor requirements and rates for 2014 are: Product Hours per Unit Rate per Hour Thingone 3 $11 Thingtwo 4 14 Manufacturing overhead is allocated at the rate of $19 per direct manufacturing labor-hour. Based on the preceding projections and budget requirements for Thingone and Thingtwo, prepare the following budgets for 2014: Required 1.Revenues budget (in dollars) 2.What questions might the CEO ask the marketing manager when reviewing the revenues budget? Explain briefly. 3.Production budget (in units) 4.Direct material purchases budget (in quantities) 5.Direct material purchases budget (in dollars) 6.Direct manufacturing labor budget (in dollars) 7.Budgeted finished goods inventory at December 31, 2014 (in dollars) 8.What questions might the CEO ask the production manager when reviewing the production, direct materials, and direct manufacturing labor budgets? 9.How does preparing a budget help Sabat Corporations top management better manage the company? (Horngren 237-238) Horngren, Charles T., Srikant Datar, Madhav Rajan. Cost Accounting, VitalSource for DeVry University, 15th Edition. Pearson Learning Solutions, 2014-02-01. VitalBook file.