Learning Objective 3 $22-3 Preparing an operating budget-sales budget Brown Company manufactures luggage sets. Brown sells its luggage sets to depart- ment stores. Brown expects to sell 1,700 luggage sets for $180 each in January and 2,050 luggage sets for $180 each in February. All sales are cash only. Prepare the sales budget for January and February S22-4 Preparing an operating budget-production budget Bailey Company expects to sell 1,500 units of finished product in January and 1,750 units in February. The company has 180 units on hand on January 1 and desires to have an ending inventory equal to 80% of the next month's sales. March sales are expected to be 1,820 units. Prepare Bailey's production budget for January and February Learning Objective 3 Learning Objective 3 S22-5 Preparing an operating budget-direct materials budget Bell expects to produce 1,800 units in January and 2,155 units in February. The com- pany budgets 3 pounds per unit of direct materials at a cost of $10 per pound. Indirect materials are insignificant and not considered for budgeting purposes. The balance in the Raw Materials Inventory account (all direct materials) on January 1 is 4,950 pounds. Bell desires the ending balance in Raw Materials Inventory to be 20% of the next month's direct materials needed for production. Desired ending balance for February is 4,860 pounds. Prepare Bell's direct materials budget for January and February S22-6 Preparing an operating budget-direct labor budget Baker Company expects to produce 2,050 units in January and 1,994 units in February Baker budgets five direct labor hours per unit. Direct labor costs average $9 per hour. Prepare Baker's direct labor budget for January and February Learning Objective 3