Fuqua Company's sales budget projects unit of part 198Z of 10,000 units in January, 12,000 units in February, and 13,000 units in March. Each unit of part 198z requires 4 pounds of materials, which cost $2 per pound. Fuqua Company desires its ending raw materials inventory to equal 40% of the next month's production requirements, and its ending finished goods inventory to equal 20% of the next month's expected unit sales. The goals were met at December 31, 2020.
Instructions
- Prepare a production budget for January and February 2021.
- Prepare a direct materials budget for January 2021.
Solution
