Lubriderm Corporation has budgeted the following unit sales for the next four months:

Month Unit Sales

July 120,000

August 210,000

September 150,000

October 180,000

Plans are to have an ending inventory of finished products that equals 20% of the unit sales for the next month. Five pounds of materials are required for each finished unit produced, and each pound of material costs $8. The desired ending inventory level for materials is equal to 30% of the materials needs for the next months production. The amounts of both finished goods and materials inventory on hand on July 1st are consistent with company policy as noted above.

Required:

1) Create a data input area in your spreadsheet or in a separate tab which allows you to enter or compute the following amounts: 1) unit sales for the 4 month period by month; 2) desired ending finished goods inventory as a percentage of next months sales; 3) desired ending materials inventory as a percentage of next months production needs; 4) pounds of material required for each unit of finished product; 5) price per pound of material in dollars; 6) ending materials inventory (hint: assume October production is budgeted to be 168,000 units of finished product).

2) Prepare a production budget in units for July, August, and September.

3) Prepare a purchases budget in pounds for July, August, and September, and give total purchases in both pounds and dollars for each month.