2. Finished goods inventory values are shown below: Units 1 July 3 750 187 500 30 September 4 125 209 657 31 December 4 250 215 491 31 March 4 500 227 922 30 June 4 000 202 514 3. Management requires that ending direct materials inventory should equal 10% of the direct materials required for the next quarter. 4. Direct materials on hand at 1 July is 3 075 units at $3 each. 5. Inventory of direct materials at the end of the fourth quarter is expected to be 3 280 kilograms. Purchases 1. All purchases of direct materials are on credit. 2. Purchases will be paid for 70% in the quarter of purchase and 30% in the following quarter. Costs of Production 1. Direct materials 2 kilograms at $3 per kilogram. 2. Direct labour 1.6 hours at $18 per hour. 3. Variable factory overhead 50% of direct labour costs. 4. Fixed factory overhead is expected to be $25 000 per quarter, of which $11 250 is for depreciation of plant and equipment. 5. Direct labour and factory overhead are paid for in the quarter in which they are incurred