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Production and Purchases Budgets in Units

At the end of business on June 30, 2009, the Wooly Rug Company had 100,000 square yards of rugs and 600,000 pounds of raw materials on hand. Budgeted sales for the third quarter of 2009 are:

Month Sales

July 180,000 sq. yards

August 200,000 sq. yards

September 170,000 sq. yards

October 180,000 sq. yards

The Wooly Rug Company wants to have sufficient square yards of finished product on hand at the end of each month to meet 40 percent of the following month's budgeted sales and sufficient pounds of raw materials to meet 30 percent of the following month's production requirements. Five pounds of raw materials are required to produce one square yard of carpeting.

Prepare production budget for the months of July, August, and September, purchases budget in units for the months of July and August.