(a)Fourth quarter sales for 20x7 are 63,000 units. Estimated unit sales by quarter for 20x8 are projected as follows: Quarter 1, 72000; quarter 2, 73000; quarter 3, 68000; and quarter 4, 85000. Estimated sales for quarter 1 of 20x9 are 80000 units. The selling prices is $425 per unit.

(b)Although most sales are on credit to large companies, approximately 15% of sales are dor cash. Electra collects credit sales in the following manner: 70% in the quarter in which they are made; 20% in the quarter following the sale; 8% two quarters after the sale: and the remainder are uncollectible.

(c) There is no beginning inventory of finished goods. However, in order to keep a small supply od inventory on hand each quarter, the company has decided to institute a policy of maintaining an ending finished goods inventory of 10% of the following quarter's sales, beginning with the end of Quarter 1 of 20x8. The company has no work in process inventories since it schedules production in such a manner that all units started are completed by the end of the accounting period.

(d) Each mass storage unit uses five hours of direct labor and three units of direct materials. Workers are paid $10 per hour, and one unit of materials costs $80.

(e)There are 62500 units of direct materials in beginning inventory at january 1, 20x8. At the end of each quarter, Electra plans to have 40 percent of the raw materials needed for next quarter's unit production.

(f) Electra buys raw materials on account. Eighty percent of the purchases are paid for in the quarter of with a 2% discount, and the remaining twenty percent is paid for in the following quarter with no discount. Wages and salaries are paid on the fifteenth and thirtieth of each month.

(g) Fixed manufacturing overhead totals $950000 each quarter. Of this total, $300000 represents depreciation. The remainder of fixed manufacturing overhead is paid for in cash in the quarter incurred. The fixed manufacturing predetermined overhead rate is computed by dividing the year's total fixed manufacturing overhead by the expected annual direct labor hours.

(h)Variable manufacturing overhead is budgeted at $5 per direct labor hour. All variable manufacturing overhead expenses are paid for in the quarter incurred.

(i) Fixed selling and administrstive expenses total $300000 per quarter, including$70000 depreciation. The remaining expenses are paid for in cash in the quarter incurred.

(j) Variable selling and administrative expenses are budgeted at $10 per unit sold. All selling and administrative expenses are paid for in the quarter incurred.

(k) Electra will pay quarterly dividends of $250000. At the end of the fourth quarter, $2000000 of equipment will be purchased.

(l) The company can borrow money from its bank at a rate of 12% per year. All borrowing must be done at the beginning of a quarter, and repayments must be made at the end of the quarter. Interest is accrued and paid at the end of the quarter on the outstanding loan balance at the above annual interest rate. Borrowings and repayments must be made in even hundreds dollars.

Requirement:

(1) Sales budget, in units and dollars, by quarter and in total for the year.

(2)Production budget. in units only, by quarter and in total for the year.

(3) Direct materials purchases budget, in units and dollars bu quarter and in total for the year.