1. **Problem Statement:** Prepare the sales budget and production budget for Senator Company for September, October, and November. 2. **Given Data:** - Budgeted sales units: September = 10,000, October = 30,000, November = 40,000, December = 50,000 - Selling price per unit = 0.5 - Ending inventory must be 20% of next month's sales units - Beginning inventory on August 31 = 4,000 units 3. **Sales Budget Formula:** Sales Revenue = Budgeted Sales Units \times Selling Price 4. **Production Budget Formula:** Required Production = Budgeted Sales + Desired Ending Inventory - Beginning Inventory 5. **Calculate Sales Budget:** - September Sales = $10,000 \times 0.5 = 5,000$ - October Sales = $30,000 \times 0.5 = 15,000$ - November Sales = $40,000 \times 0.5 = 20,000$ 6. **Calculate Ending Inventory (units):** - September Ending Inventory = 20\% \times October Sales Units = $0.2 \times 30,000 = 6,000$ - October Ending Inventory = 20\% \times November Sales Units = $0.2 \times 40,000 = 8,000$ - November Ending Inventory = 20\% \times December Sales Units = $0.2 \times 50,000 = 10,000$ 7. **Calculate Production Budget:** - September Production = $10,000 + 6,000 - 4,000 = 12,000$ - October Production = $30,000 + 8,000 - 6,000 = 32,000$ - November Production = $40,000 + 10,000 - 8,000 = 42,000$ **Final Answers:** - Sales Budget (units and revenue): - September: 10,000 units, 5,000 revenue - October: 30,000 units, 15,000 revenue - November: 40,000 units, 20,000 revenue - Production Budget (units): - September: 12,000 - October: 32,000 - November: 42,000