Reference no: EM131752601

Problem - Wyatt Co. has budgeted the following unit sales:

2011         Units

Jan          10,000

Feb          8,000

March      9,000

April        11,000

May         15,000

The finished goods units on hand on Dec. 31, 2010 was 2,000 units. Each unit requires 2 pounds of raw material 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 material 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 material on hand at Dec. 31, 2010

For the first quarter of 2010, prepare (1) a production budget and (2) a direct materials budget.