Mynor Comoration manufactures and sells a seasonal product that has peak sales in the thind quatter. The following information concerns operatipns for Year 2 - the coming year- ind for the first two quarters of Year 3: 6. The cotripany's single product sclls for $8 per unit. Budzeted sales in atits for the next six quarters are as follows (all sales are on credit): Chapter 8 10. Sales are colleoted in the following pattera: 75% in tho quarter the sales are made, and tho remaining 25% in the following quarter. On Jancary 1, Yoar 2, the contupasy's balance sheet showed $65,000 in accounts receivable, nll of which will be colloted in the first quarter of the year. Bad debts are negligible and can be ignored. c. The company desires an ending finished goods inventory at the end of each quarter equal to 30% of the bodgeted unit sales for the next quartes. On December 3I, Year L, the company had 12,000 tinits on hand. d. Five pounds of raw materials 'are required to conplete one unit of peodust. The cortipany requires ending raw materials inventory at the end of ench quarter equal to 10% of the following quarter's pooduction needs. On Deoenber 31, Year 1, the contrpany had 23,000 pounds of raw materials on band. e. The raw meterial costs $0.80 per pomnd. Raw matrial purchases are ppid for in the following pattem: 609 paid in the quarter the parchases are made, and the remaining 40% paid in the following quarter. On Janaary 1, Year 2, the company's balance sheet showed $81,500 in accounts payable for raw material purchases, all of which will be piid for in the fitst quatter of the yeas. Required: Prepare the following budgets and schedules for tho year, showing both quartecly and total figures: 1. A soles budget and a schedule of expected cesth collecticis. 2. A production budget. 3. A direct materials budget and a schedule of expected cash payments foc purchases of materinls. Solution to Review Problem 1. The sales bedget is prepared as followe