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

1. The finished goods inventory on hand at the end of each month must be equal to 5000 units plus 40% of next month's sales. The finished goods inventory on June 30 is budgeted to be 29000 units.
2. The raw materials inventory on hand at the end of each month must be equal to 20% of the following month's production needs for raw materials. On June 30, the raw materials inventory for material A135 is budgeted to be 88,200 kilograms.
3. The company maintains no work in process inventories

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

	Budgeted Sales in Units
July	60,000
August	80,000
September	40,000
October	45,000
November	55,000
December	30,000

Required:

1. Compute a production budget for Playclay for the months July, August, September, and October. "Interpret your results".
2. Compute a budget showing the quantity of material A135 to be purchased for July, August, and September and for the quarter in total. "Interpret your results".