Michael Scott Paper Company has begun its first year of operations. Michael has heard that you are an expert on budgeting and has asked you to help him prepare some relevant budgets. He has submitted the following sales forecast for the upcoming fiscal year (all sales are on account):

	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter
Budgeted unit sales	18,000	12,000	34,000	28,000

The selling price of the companys product is $15.00 per unit. Management expects to collect 70% of sales in the quarter in which the sales are made, 25% in the following quarter, and 5% of sales are expected to be uncollectible. The beginning balance of accounts receivable, all of which is expected to be collected in the first quarter, is $30,000.

The company expects to start the first quarter with 2,200 units in finished goods inventory. Management desires an ending finished goods inventory in each quarter equal to 20% of the next quarters budgeted sales. The desired ending finished goods inventory for the fourth quarter is 3,520 units.

a) Compute the companys total sales.

b) Complete the schedule of expected cash collections.

c) Prepare the companys production budget for the upcoming fiscal year.

d) What is the most important budget in the master budget? Explain.