Alvarex Company produces various parts employed in the automotive industry. The sales budget for first 8 months of 2012 describes the following projections:
Month- January Units- 25,000
Month- Febr Units- 27,000
Month- March Units- 32,000
Month- April Units- 28,500
Month- May Units- 31,400
Month- June Units- 34,500
Month- July Units- 36,700
Month- August Units- 35,000
Inventory on Dec. 31 of previous year was budgeted @ 6,250 units. The desired quantity of finished goods inventory @ the end of each month in 2012 is to be equal to 25% of the next month's budgeted unit sales. Each unit of finished product requires 3 pounds of raw material. The company wants to have 30% of next month's required raw materials on hand @ the end of each month.
1- Prepare a production budget for January through June of 2012.
2- Prepare a material purchases budget for the same period, assuming that each pound of raw materials costs $22
Can someone help me calculate these problems? Thanks.