Prepare two direct materials budgets for 2018 (one for each type of raw material). The final product is made by combining two raw materials under precise conditions (e.g. temperature, pressure, time) Dry is the first material, and the company uses 75 ounces of Dry to make each product. The company will have 27,500 ounces of Dry on hand on January 1, 2018, and should end 2018 with 29,800 ounces in inventory. Dry is expected to cost $0.50 per ounce next year. Management wants to end each quarter with 4% of the following quarter's requirement for Dry. The other material, Wet, is subject to fluctuations in its availability, so the company needs to keep more on hand. It takes 5 pounds of Wet to make each product. For 2018, beginning inventory will be 9,100 pounds of Wet, and there should be 9,900 pounds of Wet on hand at the end of the year. Use a price of $3.50 per pound of Wet for your budgets. The company needs to end each quarter with inventory levels of 20% of the following quarter's need for Wet.