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 1,900,000 units. Quarterly sales are 22%, 27%, 25%, and 26%, respectively. The sales price is expected to be $42 per unit for the first three quarters and $45 per unit beginning in the fourth quarter. Sales in the first quarter of 2015 are expected to be 11% higher than the budgeted sales for the first quarter of 2014. Production: Management desires to maintain the ending finished goods inventories at 20% of the next quarters budgeted sales volume. Direct materials: Each unit requires 2 pounds of raw materials at a cost of $11 per pound. Management desires to maintain raw materials inventories at 10% of the next quarters production requirements. Assume the production requirements for the first quarter of 2015 are 502,800 pounds. Ash Creek budgets 0.3 hours of direct labor per unit, labor costs at $12.00 per hour, and manufacturing overhead at $17.00 per direct labor hour. Its budgeted selling and administrative expenses for 2014 are $6,783,000.

1) Calculate the budgeted total unit cost.

2) Prepare the budgeted income statement for 2014.