1. Key Co. manufactures beanies. The budgeted units to be produced and sold are below: August Expected Production Expected Sales 3,100 2,900 September 2,800 3,900 It takes 24 yards of yarn to produce a beanie. The company's policy is to maintain yarn at the end of each month equal to 5% of next month's production needs and to maintain a finished goods inventory at the end of each month equal to 20% of next month's anticipated production needs. The cost of yarn is $0.20 a yard. At August 1, 3,720 yards of yarn were on hand