Harris Inc. has gathered the following budgeting information for next year and has asked you to prepare

their master budget.

a$.$ Sales for the final quarter of the prior year total $400$ units. Expected sales $($in units$)$ for the

current year are: $360($Quarter $1),240($Quarter $2),320($Quarter $3),$ and $320($Quarter $4).$ Sales

for the first quarter of the following year total $480$ units. The selling price is $$620$ per unit in the

first three quarters of the year, and $$650$ per unit in the final quarter.

b$.$ Company policy calls for a given quarter's ending finished goods inventory to equal $70\%$ of the

next quarter's expected unit sales. The finished goods inventory at the end of the prior year is

$252$ units, which complies with the policy. The product's manufacturing cost is $$211$ per unit,

including per unit costs of $$84$ for materials $(6$ lbs$.$ at $$14$ per lb$.),$ $$96$ for direct labor $(4$ hours $$

$$24$ direct labor rate per hour$),$ $$19$ for variable overhead, and $$12$ for fixed overhead. Annual

fixed overhead consists, incurred evenly throughout the year, consist of depreciation on

production equipment, $$6,400$; factory utilities, $$7,900,$ and other factory overhead of $$1,588.$

c$.$ Company policy also calls for a given quarter's ending raw materials inventory to equal $50\%$ of

next quarter's expected materials needed for production. The prior year$-$end inventory is $828lbs$

of materials, which complies with the policy. The company expects to have $1,440lbs.$ of

materials in inventory at year$-$end. The company has no work in process inventory at the end of

any quarter.

d$.$ Sales representatives' commissions are $16\%$ of sales and are paid in the quarter of the sales. The

sales manager's quarterly salary will be $$24,000$ in the first three quarters of the year, and

$$26,000$ in the final quarter.

e$.$ Quarterly general and administrative expenses include $$10,000$ administrative salaries, rent

expense of $$6,000$ per quarter, insurance expense of $$5,000$ per quarter, straight$-$

line depreciation of $$5,000$ per quarter, and $1\%$ monthly interest on the $$200,000$ long$-$term note

payable $(12\%$ annually$).$

f$.$ Income taxes will be assessed at $30\%,$ and are paid in the quarter incurred.