PotteryFarm, Inc. manufactures large ceramic animals for small home décor stores.

The company expects to sell 48,000 units in 2017, 50,000 units in 2018, and 52,000 units in 2019
at an average price of $130 each. The company desires a finished good inventory of 20% of the
following year’s sales needs (assume this policy when calculating beginning inventory).

Each item manufactured requires 3 pounds of direct material at a price of $7 per pound. The
company desires a direct materials inventory of 30% of next year’s production needs (assume
this policy when calculating beginning inventory).

Each item manufactured requires 2 direct labor hours at an average rate of $15 per hour.

Variable manufacturing overhead is $20 per unit. Fixed manufacturing overhead is $875,000.

Variable selling expense is $5 per unit. Fixed selling and administration expense is $454,000.

For 2017, compute the a) revenue budget, b) the production budget, c) the direct materials
purchases budget, d) the direct labor budget, e) the manufacturing overhead budget, and f)
the selling and administration budget.