Selected information concerning sales and production for Cabot Co. for July 2012 are summarizes as follows: a Estimated sales: Product K: 40,000 units at $30.00 per unit Product L: 20,000 units at $65.00 per unit b. Estimated inventories, July 1, 2012: Material A: 4,000 lbs per unit $51,000 Material B: 3,500 lbs Product K: 3,000 units at $17 Product L: 2,700 units at $35 per unit 94,500 Total $145,500 Desired inventories on July 31, 2012: Material A: 3,000 lbs Product K: 2.500 units at $17 per unit $ 42,500 Material B: 2,500 lbs Product L: 2,000 units at $35 per unit 70,000 Total $112,500 There is no work in process inventories desired for July 31, 2012. Direct Materials used in production: Product K Product L Material A: 0.7 lb. per unit 3.5 lbs per unit Material B: 1.2 lbs. per unit 1.8 lbs per unit Unit costs for direct materials: Material A: $4.00 per lb. Material B: $2.00 per lb. Direct labor requirements: Department 1 Department 2 Product K 0.4 hr. per unit 0.15 hr. per unit Product L 0.6 hr. per unit 0.25 hr. per unit Department 1 Department 2 Direct labor rate $12.00 per hr. $16.00 per hr. Estimated factory overhead costs for July: Indirect factory wages Depreciation of plant and equipment $200,000 40,000 Material A: 3,000 lbs Product K: 2,500 units at $17 per unit $ 42,500 Material B: 2,500 lbs Product L: 2,000 units at $35 per unit 70,000 Total $112,500 There is no work in process inventories desired for July 31, 2012. Direct Materials used in production: Product K Product L Material A: 0.7 lb. per unit 3.5 lbs per unit Material B: 1.2 lbs. per unit 1.8 lbs per unit Unit costs for direct materials: Material A: $4.00 per lb. Material B: $2.00 per lb. Direct labor requirements: Department 1 Department 2 Product K 0.4 hr. per unit 0.15 hr. per unit Product L 0.6 hr. per unit 0.25 hr. per unit Department 1 Department 2 Direct labor rate $12.00 per hr. $16.00 per hr. P Estimated factory overhead costs for July: Depreciation of plant and equipment Indirect factory wages Power and light Indirect materials Total $200,000 40,000 25,000 34,000 $299,000 Instructions: 1. Prepare a sales budget for July. 2. Prepare a production budget for July. 3. Prepare a direct materials purchases budget for July. 4. Prepare a direct labour cost budget for July. Financial Management