S Company is preparing its master budget for 2019. Relevant data for its sales and production budgets are as follows:

Sales for the year are expected to total 1.2 million units. Quarterly sales are expected to be 20%, 25%, 30% and 25%, respectively of the total sales. The sales prices is expected to be $50 per unit for the first three quarters and $55 per unit beginning in the fourth quarter.

Sales for the first quarter of 2020 are expected to be 10% higher than the budgeted sales volume for the first quarter of 2019.

Production management wants to keep ending finished goods inventories at 25% of next quarters budgeted sales volume.

What is the purpose of a budget?

Prepare the sales budget and production budget by quarters per format below:

Sales Budget Year Ending 2019

Q1

Q2

Q3

Q4

Year

Expected unit sales

Unit selling price

Total sales

Production budget Year Ending 2019

Q1

Q2

Q3

Q4

Year

Expected unit sales

Add: Desired ending

finished goods units

Total required units

Less: Beginning

finished goods units

Units to be produced