Question 1 Oak Creek Company is preparing its master budget for 2020. 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 sales price is expected to be $39 per unit for the first three quarters and $45 per unit beginning the fourth quarter. Sales in the first quarter of 2021 are expected to be 10% higher than the budgeted sales for th first quarter of 2020. Production: Management desires to maintain the ending finished goods inventories at 20% of the next quarter's budgeted sales volume. Direct materials: Each unit requires 2 kg of raw materials at a cost of $10 per kilogram. Management desires to maintain raw materials inventories at 10% of the next quarter's production requirements. Assume the production requirements for the first quarter of 2021 are 500,000 kg. (a1) Your answer is correct. Prepare the sales budget by quarters for 2020. OAK CREEK COMPANY Sales Budget For the Year Ending December 31, 2020 Quarter 2 3 4 Year 200000 250000 250000 300000 1000000 Unit sales 39 39 39 45 Unit price $ 7800000 9750000 9750000 13500000 40800000 Total sales Prepare the production budget by quarters for 2020. OAK CREEK COMPANY Production Budget For the Year Ending December 31, 2020 Quarter 1 2 3 Year 4 200000 250000 Unit sales 250000 300000 1000000 Add Ending Inventory Total required Less Beginning inventory Total