Avatar, Inc. makes and sells buckets. Each bucket uses 1/2 pound of plastic. Budgeted production of buckets in units for the next three months is as follows: Budgeted production (buckets in units) April 20,000 May June 25,000 30,000 The company wants to maintain monthly ending inventories of plastic equal to 30% of the following month's budgeted production needs. The cost of plastic is $2.50 per pound 1. Prepare a direct materials purchases budget for the month of May Units to be produced Times: Direct materials per unit April Total pounds needed for production Add: Desired ending direct materials (lbs) Total materials required Less: Beginning direct materials (lbs) Direct materials purchases Times: Cost per pound Total cost of direct materials purchases Production Budget Problem Avatar, Inc. has budgeted the following unit sales: May June 2021 2022 Quarter Units Quarter Units 1 100,000 4 1 120,000 2 110,000 3 125,000 4 130,000 The finished goods inventory on hand on December 31, 2020 was 25,000 units. It is the company's policy to maintain a finished goods inventory at the end of each quarter equal to 25% of the next quarter's anticipated sales.