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Pedal-to-the-Medal, Inc. manufactures beach cruisers. The following information is available to prepare budgets for the first two quarters of 2020:

1. Sales: Quarter 1, 3,200 units; quarter 2, 4,500 units. Selling price is $300 per cruiser.
2. Direct materials: each beach cruiser requires a metal parts package (frame, bolts, seat, pedals, etc.) at a cost of $100 per cruiser; paint and decorative decals package cost another $15 per cruiser.
3. Desired inventory levels:

Type of Inventory		January 1		April 1		July 1
Beach Cruisers	600		1,200		1,500
Metal Parts (Package)	700		1,400		1,700
Paint & Decals	700		1,400		1,700

4. Direct labor: 1.5 hours per cruiser at an hourly rate of $20 per hour.
5. Manufacturing overhead is budgeted to be 85% of
6. 6. Selling & Admin expenses are expected to be 20% of sales.
7. Fixed cost is projected at $125,000 per quarter.
8. Income taxes are expected to be 25% of income before income taxes.

Based on the above information, prepare the following budgets for the first six months of 2020: (20 points)

1. Sales budget
2. Production budget
3. Direct materials budget
4. Direct labor budget
5. Budgeted income statement.

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