A sales budget is given below for one of the products manufactured by the HAMZA Inc.:

January

25,000 units

February

40,000 units

March

65,000 units

April

45,000 units

May

35,000 units

June

30,000 units

The inventory of finished goods at the end of each month must equal 20% of the next month's sales.

Each unit of product requires three kilograms of material. HAMZA Inc. has a policy of maintaining an ending inventory at the end of each month equal to 30% of the next month's production needs.

Material costs $5 per kg. HAMZA Inc. pays 50% of its material purchases in the month of purchase and 50% in the following month.

Required:

a) Create a budget showing the quantity of material to be purchased each month for January, February, and March, and in total for the quarter.

b) Create a schedule of the cash payments for direct material for the first quarter. Assume accounts payable at the end of December was $40,000.