Cost Accounting

Lubriderm Corporation has the following budgeted sales for the next two months:

Month                  Unit Sales                      Selling Price per unit

June                      90,000                                         $100

July                        120,000                                        $100

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

Five pounds of materials are required for each unit produced. Each pound of material costs $8. Target ending inventory for materials is 20,000 pounds and material inventory on June 1 was 15,000 pounds.

Required:

Prepare the following budgets for June;

a. Revenue

b. Production

c. Material usage

d. Material purchase ( how many pounds of material should be purchased and what is the cost of purchases)