2. Production Budget The company maintains a finished goods inventory equal to 20% of the following month's sales. The inventory of finished goods on July 1 is as it should be. Vaughan Company Production Budget Total 3rd Quarter July August September 3rd Quarter Budgeted Sales in Units Add: Desired Ending Inventory Total Needs Less: Beginning Inventory Required Production 10,000 1,400 11,400 2,000 9,400 7,000 3,000 10,000 1,400 8,600 15,000 1,000 16,000 3,000 13,000 32,000 5,400 37,400 6,400 31,000 4. The next Budget is the Direct Labor Budget. Let's assume that each unit takes 1.4 DLH to make and each DLH costs $16. Let's further assume that labor is paid in the month incurred. Vaughan Company DL Budget 3rd Quarter Total 3rd Quarter July August September Budgeted Production in Units DLH per Unit Total DLH needed Cost per DLH Total Direct Labor Cost