Ash Creek Company is preparing its master budget for 2014. Relevant data pertaining to its sales, production, and direct materials budgets are as follows.
Sales: Sales for the year are expected to total 1,400,000 units. Quarterly sales are 22%, 26%, 25% and 27%, respectively. The sales price is expected to be $41 per unit for the first three quarters and $45 per unit beginning in the fourth quarter. Sales in the first quarter of 2015 are expected to be 10% higher than the budgeted sales for the first quarter of 2014.
Production: Management desires to maintain the ending finished goods inventories at 25% of the next quarter's budgeted sales volume.
Direct materials: Each unit requires 2 pounds of raw materials at a cost of $11 per pound. Management desires to maintain raw materials inventories at 10% of the next quarter's production requirement. Assume the production requirements for the first quarter of 2015 are 496,400 pounds.
Prepare the sales, production, and direct materials budgets by quarters for 2014.