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    Prepare a purchases budget

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    Lubriderm Corporation has the following budgeted sales for the next six-month period:
    Month Unit Sales

    June 90,000

    July 120,000

    August 210,000

    September 150,000

    October 180,000

    November 120,000

    There were 30,000 units of finished goods in inventory at the beginning of June. Plans are to have an inventory of finished products that equal 20% of the unit sales for the next month.

    Five pounds of materials are required for each unit produced. Each pound of material costs $8. Inventory levels for materials are equal to 30% of the needs for the next month. Materials inventory on June 1 was 15,000 pounds.

    Prepare a purchases budget in pounds for July, August, and September, and give total purchases in both pounds and dollars for each month.

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    The solution explains how to prepare a purchases budget