Tonga Toys manufactures and distributes a number of products to retailers. One of these poducts, Playclay, requires 5lbs. of material A135 in the manufacture of each unit. The company is now planning raw materials needs for the 3rd quarter - July, August and September. Peak sales of Playclay occur in the 3rd quarter of each year. To keep production and shipments moving smoothly, the company has the following inventory requirements:

A) The finished goods inventory on hand at the end of each month must be equal to 10,000 units plus 31% of the next month's sales. The finished goods inventory on June 30th are busgeted to be 23,950 units.

B) The raw materials inventory on hand at the end of each month must be equal to one-half of the following month's production needs for raw materials. The raw materials inventory on June 30th for material A135 is budgeted to be 120,250 lbs.

C)The comapny maintains no work in process inventories.

A sales budget for Playclay for the last six months of the year follows.

Month: Budgeted Sales in Units:

July 45,000

August 55,000

September 75,000

October 40,000

November 25,000

December 15,000

1) Prepare a production budget for Playclay for the months July, August, September and October.

July August September October

Budget Sales: ? ? ? ?

Add: Ending Inventory ? ? ? ?

Total Needs: ? ? ? ?

Deduct: Beginning Inventory ? ? ? ?

Required Production ? ? ? ?

2) Prepare a direct materials budget showing the quantity of material A135 to be purchased for July, August and September and for the quarter total.

July August September 3rd Quarter

Production Needs: ? ? ? ?

Add: Ending Inventory ? ? ? ?

Total Material A135 Needs ? ? ? ?

Deduct: Begining Inv. ? ? ? ?

Material A135 purchases ? ? ? ?