Lane Products manufactures a popular kitchen utensil. The company recently expanded, and the controller believes that it will need to

borrow cash to continue operations. It opened negotiations with the local bank for a one$-$month loan of $$72,000$ starting March $1.$ The

bank would charge interest at the rate of $0\mathrm{.}5$ percent per month and require the company to repay interest and principal on March $31.$

In considering the loan, the bank requested a projected income statement and cash budget for March.

The following information is available:

The company budgeted sales at $28,000$ units per month in February, April, and May and at $25,000$ units in March. The selling

price is $$76$ per unit.

The company offers a $2$ percent discount for cash sales. The company's experience is that bad debts average $1$ percent of credit

sales.

The inventory of finished goods on February $1$ was $4,000$ units. The desired finished goods inventory at the end of each month

equals $25$ percent of sales anticipated for the following month. There is no work in process.

The inventory of raw materials on February $1$ was $3,080$ pounds. At the end of each month, the raw materials inventory equals no

less than $20$ percent of production requirements for the following month. The company purchases materials in quantities of $330$

pounds per shipment.

Selling expenses are $6$ percent of gross sales. Administrative expenses, which include depreciation of $$1,550$ per month on office

furniture and fixtures, total $$78,000$ per month.

The manufacturing budget for the utensil, based on normal production of $27,000$ units per month, follows.

Required:

a$-1.$ Prepare schedules computing inventory budgets by months for production in units for February, March, and April.

a$-2.$ Prepare schedules computing inventory budgets by months for raw materials purchases in pounds for February and March.

b$.$ Prepare a projected income statement for March. Cost of goods sold should equal the variable manufacturing cost per unit times the

number of units sold plus the total fixed manufacturing cost budgeted for the period. Assume that $40$ percent of sales are cash sales.