Drainage Solutions Culverts produces small culverts for water drainage under two-lane dirt roads. Budgeted unit sales for the next several months are: Month Sales September 2.500 October 2,000 November 1.300 December 1.000 Oct. Nov. 325 At the beginning of September, 625 units of finished goods were in inventory. During the final third of the year, as road construction declines, plans are to have an inventory of finished goods equal to 25 percent of the following month's sales. Each unit of finished goods requires 600 pounds of raw materials at a cost of $5 per pound. Management wishes to maintain month-end inventories of raw materials equal to 50 percent of the following month's needs. Five hundred thousand pounds of raw materials were on hand at the start of September. Required a. Prepare a production budget for September, October, and November. Do not use a negative sign with your answers. Drainage Solutions Culverts Production Budget For the Months of September, October, and November Sept. Dec. Budgeted sales 2.500 2.000 1,300 1.000 Plus desired ending inventory 500 325 250 Total inventory requirements 3.000 2.325 1,550 Less beginning inventory 625 500 Budgeted production 2.375 1,825 1.225 b. Prepare a purchases budget in units and dollars for September and October. Do not use a negative sign with your answers. Drainage Solutions Culverts Purchases Budget For the Months of September and October Sept. Oct. Nov. Units (in pounds): Production requirements 1,425.000 1,095.000 735.000 Plus desired ending inventory 547.500 367.500 Total inventory needs 1,972,500 367.500 X Less beginning inventory 500,000 547.500 Budgeted purchases in pounds 1,472,500 915.000 Dollars: Budgeted purchases: $ 7.362.500 $ 4.575,000 1