XX company manufactures bottled water. The budgeted bottles to be produced and sold are below:

Expected Production

Expected Sales

August

3,500 Bottles

2,900 Bottles

September

2,800 Bottles

3,900 Bottles

It takes 3 pounds of raw material to produce a bottle.The cost of raw material pound = $1.

The company's policy is to maintain raw material ending inventory at the end of each month equal to 5% of next month's production needs and to maintain a finished goods inventory at the end of each month equal to 20% of next month's anticipated production needs.