Gerrad Manufacturing has projected sales of its product for the next six months as follows:

January	240	units
February	560	units
March	800	units
April	720	units
May	320	units
June	240	units

The finished product requires 3 pounds of raw material and 10 hours of direct labor. Gerrad tries to maintain a Finished Goods ending inventory equal to the next two months of sales and a Raw Material ending inventory equal to one-half of the current months production needs. Januarys beginning inventories are expected to conform to company policy. a. Prepare a production budget for February, March, and April.

Note: Use a negative sign in your schedule to indicate that an amount is subtracted.

	February	March	April
Sales
EI
Total units needed
BI
Units produced

b. Prepare a forecast of the units and cost of raw material that will be required for February, March, and April. The expected cost per pound of raw material is expected to be $2 in February, $2.30 in March, and $2.40 in April.

	February	March	April
Required raw material units
Cost of raw material purchases

c. Prepare a direct labor budget (assuming a $12 per hour rate) for February, March, and April.

	February	March	April
Units produced
DLHs per unit
Total hours
Cost per DLH
Cost of DL

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