Diane Buswell is preparing the 2025 budget for one of Current Designs' rotomolded kayaks. Extensive meetings with members of the sales department and executive team have resulted in the following unit sales projections for 2025 and preliminary sales projections for 2026. 2025: Quarter 1 1,000 kayaks Quarter 2 1,500 kayaks Quarter 3 Quarter 4 750 kayaks 750 kayaks 2026: Quarter 1 Quarter 2 1,100 kayaks 1,500 kayaks Current Designs' policy is to have finished goods ending inventory in a quarter equal to 20% of the next quarter's anticipated sales. Ending inventory of finished goods at December 31, 2024, will be 200 rotomolded kayaks. Production of each kayak requires 54 pounds of polyethylene powder and a finishing kit (rope, seat, hardware, etc.). Company policy is that the ending inventory of polyethylene powder should be 25% of the amount needed for production in the next quarter. Assume that the ending inventory of polyethylene powder on December 31, 2024, is 19,400 pounds. The finishing kits can be assembled as they are needed. As a result, Current Designs does not maintain a significant inventory of the finishing kits. The polyethylene powder used in these kayaks costs $1.50 per pound, and the finishing kits cost $170 each. Production of a single kayak requires 2 hours of time by more experienced, type I employees and 3 hours of finishing time by type II employees. The type I employees are paid $15 per hour, and the type II employees are paid $12 per hour. Selling and administrative expenses for this line are expected to be $45 per unit sold plus $7,500 per quarter. Manufacturing overhead is assigned at 150% of labor costs. The cost and production data in tabular form are presented here. Desired ending inventory of polyethylene powder Desired ending inventory of finished units Estimated inventories Finished goods inventory at Dec. 31, 2024 Polyethylene powder at Dec. 31, 2024 Polyethylene powder at Dec. 31, 2024 25% of next month's production 20% of next month's unit sales 200 kayaks 19,400 pounds 15,930 pounds