The company is completing its fifth year of operations and is preparing to build its master budget for the coming year (2015). The budget will detail each quarters activity and the activity for the year end in total. The master budget will be based on the following information:

a. Fourth-quarter sales for 2014 are 46,000 units.

b. Unit sales per quarter for 2015 are projected by sales staff as follows:

First quarter 48,000

Second quarter 50,000

Third quarter 49,000

Fourth quarter 51,000

The selling price is $400.00 per unit. All sales are credit sales. Optima Company collects 70% of credit sales in the same quarter the sale is made and the remaining 30% is collected in the following quarter. There are no bad debts.

c. The finished goods ending inventory policy is to have 20% of next quarters sales on hand at the end of each quarter.This policy was met on January 1, 2015.First quarter sales projections for 2016 are 47,000 units.

d. Each mass-storage unit uses 6 pieces of plastic, the raw material needed to produce each mass-storage system, and 7 hours of direct labor.Each piece of plastic cost $21.00 and direct laborers are paid $23.00 per hour.

e. At the end of each quarter, Optima Company plans to have 6% of the direct materials needed for the current quarters production. On January 1, 2015, 16,704 pieces of plastic (direct materials) are expected to be on hand.

f. Optima Company buys direct materials on account.65% of the purchases are paid for in the quarter of acquisition and the remaining 35% are paid for in the following quarter.Wages and salaries are paid on the 15^th and 30^th of each month.

g. Variable overhead is budgeted at $9.00 per direct labor hour.Fixed overhead totals $1,550,000 per quarter consisting of the following items: $650,000 in maintenance, $400,000 in supervision, $300,000 in depreciation, and $200,000 in rent.All overhead expenses are paid in cash in the quarter incurred.

h. Variable selling and administrative expenses are budgeted at $6.50 per unit sold.Fixed selling and administrative expense totals $500,000 per quarter consisting of $275,000 in salaries, $125,000 in advertising, and $100,000 in depreciation. All selling and administrative expenses are paid in cash in the quarter incurred.

i. Optima Company will pay quarterly cash dividends of $100,000.Each quarter they will purchase $525,000 worth of equipment plus an additional equipment purchase worth $325,000 in the fourth quarter. All purchases are paid in cash.

j. The balance sheet as of December 31, 2014, is as follows:

Assets	December 31, 2014
Cash	$1,495,700
Accounts Receivable	5,520,000
Direct Materials Inventory	350,784
Finished Goods Inventory	3,660,864
Plant and Equipment	11,300,000
Total assets	$ 22,327,348
Liabilities & Equity
Accounts Payable *	$ 2,169,014
Capital Stock	12,350,000
Retained Earnings	7,808,334
Total liabilities & equity	$22,327,348

* For purchases of direct materials only.

Required: Prepare a master budget for Optima Company for each quarter of 2015 and for the year in total. The following component budgets must be included:

Sales budget

Production budget

Direct materials purchases budget

Direct labor budget

Overhead budget

Selling and administrative budget

Ending finished goods budget

Cost of goods sold budget.(Assume that there is no work-in-process inventory at the end of each qtr.)

Budgeted Income Statement

Cash budget

Budgeted Balance Sheet