Part 3 - Bottoms-Up Operating Budget Use the following data to prepare a bottoms-up budget and answer the questions below. Sales: The company expects to sell 300,000 units and had beginning finished inventory of 25,000 units and desires ending finished inventory of 30,000 units. The sale price is $20 per unit and the overall product cost is $16 per unit (total product costs are reported in cost of goods sold") Direct Material Cost Material costs are $4 per unit. The company desires ending material inventory of $130,000 (54 per unit) and had beginning material inventory of 120,000 ($4 per unit). Material used in production is transferred to work in process inventory. Direct Labour Cost: The company expects direct labour hours to be 60,000 at $26.50 per hour. This cost is part of work in process inventory. Factory Overhead Cost: The total operating budget is $2,100,000 for factory overhead. This cost is part of work in process inventory. Work in Process Inventory: The company had beginning work in process inventory of $520,000 and desires ending work in process inventory of $560,000 Corporate overhead and taxes are estimated at $900,000 and $60,000 respectively Questions (show calculations where applicable) 1. Prepare a bottoms-up income statement. Sales Cost of Goods Sold Gross Profit Corporate Overhead Expenses Earnings before Taxes Taxes Net Income 2. What are the total product costs in the income statement? 3. Prepare a direct materials purchases budget. 4. What type of cost is Direct Labour in the budget? 5. What would be the impact (up or down versus sales units) on production units if the company decided to increase ending finished inventory