Prepare a production budget and a direct materials budget

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Reference no: EM13752927

Clingy Company budgeted the following unit sales:

January 14,000

February 12,000

March 11,000

April 16,000

May 13,000

Each unit sells for $25. Each unit requires 2 yards of fabric, which is estimated to cost $3.50 per yard. It is the company's policy to maintain a finished goods inventory at the end of each month equal to 20% of next month's anticipated sales. Clingy Company also has a policy of maintaining a raw materials inventory at the end of each month equal to 10% of the yards needed for the following month's production. There were 2,400 yards of fabric on hand at March 1.

Prepare a production budget and a direct materials budget for March.

Reference no: EM13752927

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