of the continued advancement of technology, a drone camera market has emerged in

recent years. The drone camera market has been growing as more photography enthusiasts have

begun adopted this high-tech approach to capturing still images and video using remotely

controlled devices. Eager to capture a share of this growing market, DroneZone entered the

market in early 2018. DroneZone manufactures camera drones, selling primarily to retailers.

DroneZone is pleased with its financial performance over its first few years of operations,

optimistic to achieve continued financial success. For planning and control purposes the

company utilizes a monthly master budget, which is usually developed at least three months in

advance of the budget year. The company has a fiscal year ending December 31.

It is now Sept 15, 2019. You have been asked to prepare the Master Budget for the year ending

December 31, 2020.

Based on your discussions with the various departments throughout the company, you have

collected the following relevant information for preparing the budget:

Sales

1. The marketing department is forecasting the following annual sales:

For the year ended December 31, 2019: 9,000 units at $1,000 each*

For the year ended December 31, 2020: 10,000 units at $1,000 each

*Expected sales for the year ended December 31, 2019 were based on actual sales to date and

budgeted sales for the duration of the year.

2. Peak months for sales generally correspond with summer weather and gift-giving

holidays. History shows that January is the slowest month, with only 1% of annual sales,

followed closely behind by Feb-April with 2% of annual sales for each month. Sales spike

during summer months with May, June, July, and August contributing 12%, 15%, 12%,

and 10% of annual sales, respectively. With the back-to-school focus in September, there

is a significant dip in camera drone sales to 3% of annual sales. As Christmas shopping

picks up momentum, winter sales increase to 8% in October, 13% in November, and