Prepare sales, production, and direct materials budgets. DO IT! 9.2 (LO 2), AP Pargo Company is preparing its master budget for 2022. 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 unit selling price is expected to be $40 for the first three quarters and $45 beginning in the fourth quarter. Sales in the first quarter of 2023 are expected to be 20% higher than the budgeted sales for the first quarter of 2022.

Production. Management desires to maintain the ending finished goods inventories at 25% of the next quarters budgeted sales volume.

Direct materials. Each unit requires 2 pounds of raw materials at a cost of $12 per pound. Management desires to maintain raw materials inventories at 10% of the next quarters production requirements.

Assume the production requirements for first quarter of 2023 are 450,000 pounds. Prepare the sales, production, and direct materials budgets by quarters for 2022.