Production and purchases budgets; writing Narisho Supply is in the process of preparing the budget for the first quarter. The following projections for unit sales have been made: Sales.. a. b. January 72,000 Finished, units Direct material M, pounds. Direct material N, pounds. Direct material O, pounds. February 64,000 Each finished unit requires three direct materials: 4 pounds of Material M, 2.5 pounds of Material N, and 2 pounds of Material O. Based on company policies, the following estimates of finished units and pounds of direct material inventories are made: March 60,000 December January 18,000 16,000 13,500 12,000 9,000 8,000 7,300 9,400 Total 196,000 February 15,000 11,250 7,500 8,200 March 14,000 10,500 7,000 8,500 Prepare a monthly production and purchases budget for the first quarter. The production supervisor wants to purchase new production equipment for the year. Such equipment would largely replace the current labor-intensive production system. Write a memo to corporate management explaining why new production equipment could affect the produc- tion and purchases budget. Who should be consulted to determine the new material requirements per unit if the new pro- duction equipment is installed?

Production and purchases budgets; writing Narisho Supply is in the process of preparing the oudget for the first quarter. The following projections for unit sales have been made: Each finished unit requires three direct materials: 4 pounds of Material M, 2.5 pounds of Mate fal V, and 2 pounds of Material O. Based on company policies, the following estimates of finis ed inits and pounds of direct material inventories are made: Prepare a monthly production and purchases budget for the first quarter. The production supervisor wants to purchase new production equipment for the year. S. equipment would largely replace the current labor-intensive production system. Write a mo to corporate management explaining why new production equipment could affect the prou tion and purchases budget. Who should be consulted to determine the new material requirements per unit if the new duction equipment is installed