how to comprehend a3 step by step solution

Question 1 Oak Creek Company is preparing its master budget for 2020. Relevant data pertaining to its sales, production, and direct materials budgets are as follows. Sales: Sales for the year are expected to total 1,000,000 units. Quarterly sales are 20%, 25%, 25%, and 30%, respectively. The sales price is expected to be $39 per unit for the rst three quarters and $45 per unit beginning in the fourth quarter. Sales in the rst quarter of 2021 are expected to be 10% higher than the budgeted sales for the rst quarter of 2020. Production: Management desires to maintain the ending nished goods inventories at 20% of the next quarter's budgeted sales volume. Direct materfafs: Each unit requires 2 kg of raw materials at a cost of $10 per kilogram. Management desires to maintain raw materials inventories at 10% of me next quarter's production requirements. Assume the production requirements for the rst quarter of 2021 are 540,000 kg. V (a1) Yo ur a nsw er is correct. Prepare the sales budget by quarters for 2020. OAK CREEK COMPANY Sales Budget For the Year Endlng December 31, 2020 .r J v .r .I 4 .1 q 4 Total sales '- '- '- '. '- (a2) Your answer is correct. Prepare the production budget by quarters for 2020. OAK CREEK COMPANY Production Budget For the Year Ending December 31, 2020 Quarter Year 1 2 3 4 Unit sales 200000 250000 250000 300000 1000000 Add Ending inventory 50000 50000 60000 44000 44000 Total required 250000 300000 310000 344000 1044000 Less v Beginning inventory 40000 50000 50000 60000 40000 210000 250000 260000 284000 1004000 TotalV (63] Your answer is partially correct. Tr'lur again. Prepare the direct materials budget by quarters for 2020. OAK CREEK COMPANY Direct Materials Budget For the Year Ending December 31, 2020 sf Units to be produced v 210000 250000 260000 204000 1004000 v Direct materials per unit v 2 2 2 v Total kilograms required for production v 420000 500000 520000 563000 2008000 " El- 51- Add v _ Desired ending inventoryr v 50mm. 52mm. 553.39 ' 60000 ' ' 218800 ' sf Total materials required v 10 Direct materials purchases v 428000 502000 524800 ' 571200 ' ' 134300 ' q 1848000 $ $ $ Total cast of direct materials purchases v -. 4230000 -. 5020000 -. 5243000 -. ' _