Production, direct materials, and direct labor budgets Gerrad Manufacturing has projected sales of its product for the next six months as follows:

January	120	units
February	280	units
March	400	units
April	360	units
May	160	units
June	120	units

The finished product requires 3 pounds of raw material and 10 hours of direct labor. Gerrad tries to maintain a Finished Goods ending inventory equal to the next two months of sales and a Raw Material ending inventory equal to one-half of the current months production needs. Januarys beginning inventories are expected to conform to company policy. a. Prepare a production budget for February, March, and April.

Note: Use a negative sign in your schedule to indicate that an amount is subtracted.

	February	March	April
Sales
EI
Total units needed
BI
Units produced

b. Prepare a forecast of the units and cost of raw material that will be required for February, March, and April. The expected cost per pound of raw material is expected to be $2 in February, $2.30 in March, and $2.40 in April.

c. Prepare a direct labor budget (assuming a $12 per hour rate) for February, March, and April.

	February	March	April
Required raw material units
Cost of raw material purchases

	February	March	April
Units produced
DLHs per unit
Total hours
Cost per DLH
Cost of DL