Question:
Asheville Company is preparing its master budget for 2012. Relevant data pertaining to its sales and production budgets are as follows.
Sales: Sales for the year are expected to total 2,100,000 units. Quarterly sales, as a percentage of total sales, are 15%, 25%, 35%, and 25%, respectively. The sales price is expected to be $70 per unit for the first three quarters and $75 per unit beginning in the fourth quarter. Sales in the first quarter of 2013 are expected to be 10% higher than the budgeted sales volume for the first quarter of 2012.
Production: Management desires to maintain ending finished goods inventories at 20% of the next quarter's budgeted sales volume.