3. Young Company has budgeted the following unit sales:

20CY Units

January 10,000

February 8,000

March 9,000

The finished goods units on hand on December 31, 20LY, was 2,000 units. Each unit requires 2 pounds of raw materials that are estimated to cost an average of $4 per pound. It is the company's policy to maintain a finished goods inventory at the end of each month equal to 10% of next month's anticipated sales. They also have a policy of maintaining a raw materials inventory at the end of each month equal to 20% of the pounds needed for the following month's production. There were 3,920 pounds of raw materials on hand at December 31, 20CY.

Instructions:

Prepare a production budget for January and February.