Illustrative Problem Selected information concerning sales and production for Cabot Co. for July 2010 are summarized as follows: a. Estimated sales: Product K: 40,000 units at $30.00 per unit Product L: 20,000 units at $85.00 per unit b. Estimated inventories, July 1, 2010 Material A: 4,000 lbs. Product K: 3,000 units at $17 per unit $51,000 Material B: 3,500 lbs. Product L: 2,700 units at $35 per unit 94,500 45,500 Total There were no work in process inventorics estimated for July 1,2010. c. Desired inventories at July 31,2010 Material A: Material B: 3,000 lbs. 2,500 Ibs. Product K: Product L: Total 2,500 units at $17 per unit 2,000 units at $35 per unit $42,500 70.000 There were no work in process inventories desired for July 31, 2010. Direct materials used in production: d. Product L 3.5 lbs. per unit 1.8 lbs. per unit Product K Material A 0.7 lb. per unit 1.2 lbs. per unit Material B: Unit costs for direct materials: Material A: $4.00 per lb. Material B: $2.00 per lb. e. f. Direct labor requirements: Department 1 0.4 hr. per unit 0.6 hr. per unit Department 2 0.15 hr. per unit 025 hr. per unit Product K Product L Department 1Department 2 $12.00 per hr. g- Direct labor rate $16.00 per hr h. Estimated factory overhead costs for July: Indirect factory wages $200,000 40,000 25,000 Depreciation of plant and equipment Power and light Indirect materials Total Instructions 1. Prepare a sales budget for July. 2. Prepare a production budget for July. 3. Prepare a direct materials purchases budget for July 4. Prepare a direct labor cost budget for July. 5. Prepare a cost of goods sold budget for July