Alex Corp. has projected sales to be 10,000 units in January; 12,000 units in February; 8,000 units in March; 10,000 units in April; and 12,000 units in May. There are 900 units on hand on January 1. Management has determined that it needs to carry 5% of the following month's sales in ending inventory.

Assume that each unit requires 4 litres of raw materials. There are 6,000 litres of raw materials on hand at January 1. Management has decided that raw materials ending inventory should be 15% of next month's production needs. Alex Corp. pays $1.50 per litre for raw materials.

REQUIRED:

a)Prepare the production budget for the first quarter, by month and in total.

b)Prepare the raw materials budget for the first quarter, by month and in total. Include quantity of materials to purchase and cost for the purchases.