The following budget information relates to the Staples Company unit sales:

2016 Units

April 27,000

May 32,000

June 17,000

July 21,000

August 16,000

The finished goods units on hand on March 31, 2016, was 2,000

units. Each unit requires 3 pounds of raw materials that are

estimated to cost an average of $6 per pound. It is the company's

policy to maintain a finished goods inventory at the end of each

month equal to 15% of next month's anticipated sales. They also have

a policy of maintaining a raw materials inventory at the end of each

month equal to 25% of the pounds needed for the following month's

production. There were 10,000 pounds of raw materials on hand at

March 31, 2016.

INSTRUCTIONS

Prepare the following budget reports for the second quarter of 2016,

a) a production budget

(b) a direct materials budget.