Question
Warood Company's sales budget projects unit sales of part CB78 of 10,000 units in January, 12,000 units in February, and 13,000 units in March. Each
Warood Company's sales budget projects unit sales of part CB78 of 10,000 units in January, 12,000 units in February, and 13,000 units in March. Each unit of part CB78 requires 3 pounds of materials, which cost $4 per pound. Warood Company desires its ending raw materials inventory to equal 30% of the next month's production requirements, and its ending finished goods inventory to equal 25% of the next month's expected unit sales. These goals were met at December 31, 2018. Instructions: Prepare a production budget for January and February 2019. Prepare a direct materials budget for January 2019.
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