Exercise 23-8 Fuqua Companys sales budget projects unit sales of part 198Z of 10,900 units in January, 12,200 units in February, and 14,000 units in March. Each unit of part 198Z requires 3 pounds of materials, which cost $4 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.

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

b) Prepare a direct materials budget for January 2017.