Fenzel Slide Oil produces a lubricant, SlickTone, which is used on trombone slides. Information about the budget for the year 2021 is as follows: 

1. The company expects to sell 7,000 bottles of SlickTone in the first quarter, 6,000 in the second quarter, 10,000 in the third quarter, and 8,000 in the fourth quarter. 

2. A bottle of SlickTone requires six ounces of Chemical A and three and one-half ounces of Chemical B. 

3. For the first, second, and third quarters of 2021, the desired ending inventory of finished goods is equal to eight percent of next quarter’s sales, whereas the desired ending inventory for material is 12 percent of next quarter’s production requirements. 

4. There are 1,600 bottles of SlickTone, 4,800 ounces of Chemical A, and 2,400 ounces of Chemical B on hand at the beginning of the first quarter. 

5. At the end of the fourth quarter, the company must have 1,000 bottles of SlickTone, 8,000 ounces of Chemical A, and 4,000 ounces of Chemical B to meet its needs in the first quarter of 2022. 

6. The cost of Chemical A is $1.05 per ounce, the cost of Chemical B is $0.15 per ounce, and the selling price of SlickTone is $12.00 per bottle. 

7. The cost of direct labor is $0.55 per bottle, and the cost of variable overhead is $0.75 per bottle. Fixed manufacturing overhead is $3,000 per quarter. 

8. Variable selling and administrative expense is four percent of sales and fixed selling and administrative expense is $3,000 per quarter. 

Required      

a. Prepare a production budget for each quarter of 2021.      

b. Prepare a material purchases budget for each quarter of 2021. 

c. Prepare a budgeted income statement for each quarter of 2021 (ignore taxes).