Exercise 21-8 (Part Level Submission)

Fuqua Companys sales budget projects unit sales of part 198Z of 10,900 units in January, 12,800 units in February, and 13,100 units in March. Each unit of part 198Z requires 4 pounds of materials, which cost $3 per pound. Fuqua Company desires its ending raw materials inventory to equal 40% of the next months production requirements, and its ending finished goods inventory to equal 20% of the next months expected unit sales. These goals were met at December 31, 2016.

1. Prepare a production budget for January and February 2017.

2. Prepare a direct materials budget for January 2017.