Refer to Upward Inc. in Exercise 10.26. Assume that each unit requires 4 litres of raw materials. There are 6,000 litres of raw materials on hand at January 1. Management has decided that raw materials ending inventory should be 15% of next month's production needs. Upward Inc. pays $1.50 per litre for raw materials.

Upward Inc. form Exercise 10.26

Upward Inc. has projected sales to be 10,000 units in January; 12,000 units in February; 8,000 units in March;10,000 units in April; and 12,000 units in May. There are 900 units on hand on January 1. Management has determined that it needs to carry 5% of the following month's sales in ending inventory.

REQUIRED

Prepare a raw materials budget for the first quarter, by month and in total. Include quantity of materials to purchase and cost for the purchases.