Pillows Unlimited makes decorative throw pillows for home use. The company sells the pillows to home dcor retailers for $14 per pillow. Each pillow requires

Pillows Unlimited makes decorative throw pillows for home use. The company sells the pillows to home décor retailers for $14 per pillow. Each pillow requires 1.25 yards of fabric, which the company obtains at a cost of $6 per yard. The company would like to maintain an ending stock of fabric equal to 10% of the next month’s production requirements. The company would also like to maintain and ending stock of finished pillows equal to 20% of the next month sales.

Sales (in units) are projected to be as follows for the first 3 months of the year:

January	200,000
February	220,000
March	230,000

Requirements:

1- Prepare the following budgets for the first three months of the year, as well as a summary budget for the quarter:

2- Prepare the sale budget, including a separate section that details the types of sales made. For this section, assume that 20% of the company’s pillows are cash sales, while the remaining 80% are sold on credit terms.

3- Prepare the production budget. Assume that the company anticipates selling 240,000 units in April.

4- Prepare the direct materials purchase budget assume that the company need 300,000 yards of fabric for production in April.