Problems 38. Budgeting for Sales, Production, Direct Materials, Direct Labor, and Manufacturing Overhead: Ethical issues. Sanders Swimwear, Inc., produces swimsuits. The following information is to be used for the operating budget this coming year. Average sales price for each swimsuit is estimated to be $50. Unit sales for this coming year ending December 31 are expected to be as follows: First quarter 3.000 Second quarter 5.000 Third quarter 20.000 Fourth quarter 6,000 . Finished goods inventory is maintained at a level equal to 10 percent of the next quarter's sales. Finished goods inventory at the end of the fourth quarter budget period is estimated to be 400 units. Each unit of product requires 3 yards of direct materials, at a cost of $4 per yard. Management prefers to maintain ending raw materials inventory equal to 20 percent of next quarter's materials needed in production, Raw materials inventory at the end of the fourth quarter budget period is estimated to be 9.500 yards. Each unit of product requires 0.5 direct labor hours at a cost of $12 per hour. Variable manufacturing overhead costs are Indirect materials 50 60 per unit Indirect labor $3.50 per un Other 52 80 per und Fixed manufacturing overhead costs per quarter are Sales $30,000 Other $ 5.000 Depreciation $9.330 Required 1. Prepare a sales budget using the format shown in Figure 9.3 Sales Budget for Jerry's Ice Cream". 2. Prepare a production budget using the format shown in Figure 9.4 Production Budget for Jerry's Ice Cream". 3. Prepare a direct materials purchases budget using the format shown in Figure 9.5 Direct Materials Purchases Budget for Jerry's Ice Cream: 4. Prepare a direct labor budget using the format shown in Figure 9.6 "Direct Labor Budget for Jerry's Ice Cream", 5. Prepare a manufacturing overhead budget using the format shown in Figure 9.7 'Manufacturing Overhead Budget for Jerry's Ice Cream