Question 2 Flight Company recently hired you as a managerial accountant. It hasn't used budgets in the past but is expecting significant growth in the next year and needs to get a loan to pay for the expansion. In order to help determine the amount of the loan needed, your manager asks you to prepare the following budgets: sales budget, . production budget, direct materials purchases budget, direct labor budget, and . overhead budget. The estimates for the next year are as follows: . Quarter 1 sales: 520,000 units Quarter 2 sales: 750,000 units . Quarter 3 sales: 900,000 units Quarter 4 sales: 875,000 units . Quarter 1 of the following year sales: 475,000 units The price of the product: $30 Beginning finished goods inventory: 40,000 units The company policy is to have 10% of next quarter's sales in ending inventory. The product contains only two materials (Material A and Material B). . The product requires three units of Material A costing $3. . The product requires one unit of Material B costing $1. The beginning materials inventory for Material A is 250,000 units. . The beginning materials inventory for Material B is 175,000 units. . Company policy is to have 15% of next quarter's material needs in ending inventory. . Desired ending inventory for the year in Material A is 475,000 units. . Desired ending inventory for the year in Material B is 225,000 units. . The direct labor required for each product is 0.25 hours at an average rate of $10 per hour. . The variable overhead rate is $4 per direct labor hour. Fixed overhead is expected to be $45,000 per quarter