Falcon Corporation manufactures and sells a seasonal product that has peak sales in the third quarter. The following information concerns operations for Year 2the coming yearand for the first two quarters of Year 3:

1. The companys single product sells for $8 per unit. Budgeted unit sales for the next six quarters are as follows (all sales are on credit):

Year 2 Quarter Year 3 Quarter

1 2 3 4 1 2

Budgeted unit sales 40,000 50,000 100,000 50,000 70,000 80,000

2. Sales are collected in the following pattern: 75% in the quarter the sales are made, and the remaining 25% in the following quarter. On January 1, Year 2, the companys balance sheet showed $65,000 in accounts receivable, all of which will be collected in the first quarter of the year. Bad debts are negligible and can be ignored.

3. The company desires an ending finished goods inventory at the end of each quarter equal to 30% of the budgeted unit sales for the next quarter. On December 31, Year 1, the company had 13,000 units on hand.

4. Six pounds of raw materials are required to complete one unit of product. The company requires ending raw materials inventory at the end of each quarter equal to 10% of the following quarters production needs. On December 31, Year 1, the company had 23,000 pounds of raw materials on hand.

5. The raw material costs $0.85 per pound.

Instructions:

Prepare the following budgets and schedules for the year, showing both quarterly and total figures:

(a). A sales budget and a schedule of expected cash collections.

(b). A production budget.

(c). A direct materials budget and a schedule of expected payment for direct materials.

Format required: Word or Excel