Noise Hollow launched a new stereo in January. The budget for the stereo is as follows:

Actual units of materials required per finished good were 12 units in January and 11 units in February. Actual cost of materials was \(\$ 6\) per unit in January and \(\$ 5.50\) per unit in February.
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A. Show what the budget would have looked like with the actual material requirements and costs.
B. What strategic considerations should be taken into account when reviewing this product?

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January February Unit sales 1.000 1.500 Add: Desired ending inventory 300 400 Subtotal 1,300 1.900 Less: Beginning inventory 0 300 Total production 1.300 1,600 Units of materials per finished good 10 10 Required units of materials 13,000 16,000 Cost of materials per unit $5 $5 Total purchasing costs $65,000 $80,000