Question 3

On January 1, 2017, the Hardin Company budget committee has reached agreement on the following data for the 6 months ending June 30, 2017.

Sales units:		First quarter 6,000; second quarter 6,900; third quarter 7,400
Ending raw materials inventory:		40% of the next quarters production requirements
Ending finished goods inventory:		25% of the next quarters expected sales units
Third-quarter production:		7,840 units.

The ending raw materials and finished goods inventories at December 31, 2016, follow the same percentage relationships to production and sales that occur in 2017. 4 pounds of raw materials are required to make each unit of finished goods. Raw materials purchased are expected to cost $5 per pound.

Prepare a production budget by quarters for the 6-month period ended June 30, 2017.

Prepare a direct materials budget by quarters for the 6-month period ended June 30, 2017.