E10.21 (LO 2) On January 1, 2023, the Chinlee Company budget committee reached agreement on the following data for the six months ending June 30, 2023:

1. Sales units: First quarter 5,000; second quarter 6,000; third quarter 7,000
2. Ending raw materials inventory: 40% of the next quarters production requirements
3. Ending finished goods inventory: 25% of the next quarters expected sales units
4. Third-quarter production: 7,200 units

The ending raw materials and finished goods inventories at December 31, 2022, had the same percentages for production and sales that are budgeted for 2023. Three kilograms of raw materials are needed to make each unit of finished goods. Raw materials purchased are expected to cost $4 per kilogram.

Instructions

1. Prepare a production budget by quarters for the six-month period ended June 30, 2023.
2. Prepare a direct materials budget by quarters for the six-month period ended June 30, 2023.