Lubriderm Corporation has the following budgeted sales for the next six-month period:
Month Unit Sales
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.
The solution explains how to prepare a purchases budget