Brighton, Inc., manufactures kitchen tiles. The company recently expanded, and the controller believes that it will need to borrow cash to continue operations. It began negotiating for a one-month bank loan of $600,000 starting May 1. The bank would charge interest at the rate of 0.75 percent per month and require the company to repay interest and principal on May 31. In considering the loan, the bank requested a projected income statement and cash budget for May.

The company budgeted sales at 600,000 units per month in April, June, and July and at 500,000 units in May. The selling price is $4 per unit. The inventory of finished goods on April 1 was 150,000 units. The finished goods inventory at the end of each month equals 25 percent of sales anticipated for the following month. There is no work in process. The inventory of raw materials on April 1 was 71,875 pounds. At the end of each month, the raw materials inventory equals no less than 50 percent of production requirements for the following month. The company purchases materials in quantities of 63,500 pounds per shipment. Selling expenses are 10 percent of gross sales. Administrative expenses, which include depreciation of $2,500 per month on office furniture and fixtures, total $165,000 per month. The manufacturing budget for tiles, based on normal production of 500,000 units per month, follows:

Materials (0.25 pound per tile, 125,000 pounds, $4 per pound) 500,000

Labor 400,000

Variable overhead 210,000

Fixed overhead (includes depreciation of $200,000) 400,000

Total 1,510,000

Required: 3. Prepare schedules computing inventory budgets by months for 1. Production in units for April, May, and June. (Do not round intermediate calculations.) Budgeted sales 600,000 500,000 600,000 Inventory required at end of month 125,000 150,000 150,00 Less: Inventory on hand at beginning of month 150,000 125,000 150,000 Budgeted production - Units 575,000 525,000 600,000 2. Raw materials purchases in pounds for April and May. (Do not round intermediate calculations.) Balance required by purchase _- Budgeted purchases Pounds - - b. Prepare a projected income statement for May. Cost of goods sold should equal the variable manufacturing cost per unit times the number of units sold plus the total xed manufacturing cost budgeted for the period. When calculating net sales assume cash discounts of 1 percent and bad debt expense of 0.50 percent. (Do not round intermediate calculations.) Cost of Sales: _