NameSchedule 1- Sales Budget오2Q1Q3Q4TotalUnitsUnit priceTotal SalesSchedule 2 - Production Budget오2오4Q1Q3TotalSales in UNITSPlus: Desired finished goods ending inventoryTotal needsLess: Beginning finished goods inventoryFinished goods production needs Schedule 3: Direct Materials Purchases BudgetQ1Q2Q3Q4TotalProduction unitsx Materials per unitProduction needs for direct materialsPlus: Desired ending inventory of direct materialsTotal needsLess: Beginning direct materials inventoryPurchases of direct materialsx Cost per unitDirect materials purchases costSchedule 4: Direct labor BudgetQ1Q2Q3Q4TotalProduction unitsxLabor Hours per unitLabor hours neededx Cost per labor hourTotal direct labor costSchedule 5: Overhead BudgetQ1Q2Q3Q4TotalBudgeted hoursx Variable rate per hourBudgeted variable overheadBudgeted fixed overheadTotal Overhead

Optima Company is a high-technology organization that produces a mass-storage system. The design of Optima's system is unique and represents a breakthrough in the industry. The units Optima produces combine positive features of both compact and hard disks. The company is completing its fifth year of operations and is preparing to build its master budget for the coming year (20X1). The budget will detail each quarter's activity and the activity for the year in total. The master budget will be based on the following information:

Fourth-quarter sales for 20X0 are 55,000 units.

Unit sales by quarter (for 20X1) are projected as follows:

The selling price is $400 per unit. All sales are credit sales. Optima collects 85% of all sales within the quarter in which they are realized; the other 15% is collected in the following quarter. There are no bad debts.There is no beginning inventory of finished goods. Optima is planning the following ending finished goods inventories for each quarter:

Each mass-storage unit uses 5 hours of direct labor and three units of direct materials. Laborers are paid $10 per hour, and one unit of direct materials costs $80.

There are 65,700 units of direct materials in beginning inventory as of January 1, 20X1. At the end of each quarter, Optima plans to have 30% of the direct materials needed for next quarter's unit sales. Optima will end the year with the same amount of direct materials found in this year's beginning inventory.

Optima buys direct materials on account. Half of the purchases are paid for in the quarter of acquisition, and the remaining half are paid for in the following quarter. Wages and salaries are paid on the 15th and 30th of each month.

Fixed overhead totals $1 million each quarter. Of this total, $350,000 represents depreciation. All other fixed expenses are paid for in cash in the quarter incurred. The fixed overhead rate is computed by dividing the year's total fixed overhead by the year's budgeted production in units.

Variable overhead is budgeted at $6 per direct labor hour. All variable overhead expenses are paid for in the quarter incurred.

Fixed selling and administrative expenses total $250,000 per quarter, including $50,000 depreciation.

Variable selling and administrative expenses are budgeted at $10 per unit sold. All selling and administrative expenses are paid for in the quarter incurred.

The balance sheet as of December 31, 20X0, is as follows:

Optima will pay quarterly dividends of $300,000. At the end of the fourth quarter, $2 million of equipment will be purchased.

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