Oak Creek Company is preparing its master budget for 2020.Relevant data pertaining to its...

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Accounting

Oak Creek Company is preparing its master budget for 2020.Relevant data pertaining to its sales, production, and directmaterials budgets are as follows.

Sales: Sales for the year are expected to total 1,000,000units. Quarterly sales are 20%, 25%, 25%, and 30%, respectively.The sales price is expected to be $40 per unit for the first threequarters and $46 per unit beginning in the fourth quarter. Sales inthe first quarter of 2021 are expected to be 10% higher than thebudgeted sales for the first quarter of 2020.

Production: Management desires to maintain the endingfinished goods inventories at 20% of the next quarter's budgetedsales volume.

Direct materials: Each unit requires 2 kg of raw materialsat a cost of $10 per kilogram. Management desires to maintain rawmaterials inventories at 10% of the next quarter's productionrequirements. Assume the production requirements for the firstquarter of 2021 are 630,000 kg.
1. Prepare the sales budget by quarters for 2020.
2. Prepare the production budget by quarters for 2020.
3. Prepare the direct materials budget by quarters for 2020.

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Answer 1 OAK CREEK COMPANY Sales Budget For the year ending December 31 2020 Quarters Year 1 2 3 4 Expected units sales 200000 250000 250000 300000 1000000 Unit selling price 40 40 40 40 40 Total Sales 8000000 10000000 10000000 12000000 See Answer

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In: AccountingOak Creek Company is preparing its master budget for 2020.Relevant data pertaining to its sales,...Oak Creek Company is preparing its master budget for 2020.Relevant data pertaining to its sales, production, and directmaterials budgets are as follows.Sales: Sales for the year are expected to total 1,000,000units. Quarterly sales are 20%, 25%, 25%, and 30%, respectively.The sales price is expected to be $40 per unit for the first threequarters and $46 per unit beginning in the fourth quarter. Sales inthe first quarter of 2021 are expected to be 10% higher than thebudgeted sales for the first quarter of 2020.Production: Management desires to maintain the endingfinished goods inventories at 20% of the next quarter's budgetedsales volume.Direct materials: Each unit requires 2 kg of raw materialsat a cost of $10 per kilogram. Management desires to maintain rawmaterials inventories at 10% of the next quarter's productionrequirements. Assume the production requirements for the firstquarter of 2021 are 630,000 kg.1. Prepare the sales budget by quarters for 2020.2. Prepare the production budget by quarters for 2020.3. Prepare the direct materials budget by quarters for 2020.