Young Company has budgeted the following unit sales:
2009 Units
January 10,000
February 8,000
March 9,000
The finished goods units on hand on December 31, 2008, was 2,000 units. Each unit requires 2 pounds of raw materials that are estimated to cost an average of $4 per pound. It is the company's policy to maintain a finished goods inventory at the end of each month equal to 10% of next month's anticipated sales. They also have a policy of maintaining a raw materials inventory at the end of each month equal to 20% of the pounds needed for the following month's production. There were 3,920 pounds of raw materials on hand at December 31, 2008.
Instructions:
For the first quarter of 2009, prepare a production budget.