Western Instruments Company is preparing its master budget for 2022. Relevant data pertaining to its sales, production, and direct materials budgets are as follows.

Sales: Sales for the year are expected to total 1 million units. Quarterly sales are 20%, 25%, 25%, and 30%, respectively. The sales price is expected to be $40 per unit for the first three quarters and $45 per unit beginning in the fourth quarter. Sales in the first quarter of 2021 are expected to be 10% higher than the budgeted sales for the first quarter of 2022.

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 rounded up to the next thousand kilograms. Assume the production requirements for the first quarter of 2022 are 500,000 kg.

a. Prepare the sales, production, and direct materials budgets by quarters for 2022.

Western Instruments Company is preparing its budgeted income statement for 2022. In addition, the company budgets 0.3 hours of direct labor per unit, labor costs at $14 per hour, and manufacturing overhead at $20 per direct labor hour. Its budgeted selling and administrative expenses for 2022 are $7 million.

b. Calculate the budgeted total unit cost.

c. Prepare the budgeted income statement for 2022.