Farlow Inc. has the following projected sales for the next four months:

At March 31, 2,148 units of finished goods are expected in inventory. Farlow’s finished goods inventory policy is to have 60 percent of the next month’s sales on hand at the end of each month. Direct material costs \($3.10\) per pound, and each unit requires 2 pounds. Raw materials inventory policy is to have 50 percent of the next month’s production needs on hand at the end of each month. Raw materials on hand at March 31 totaled 3,757 pounds.

Required:

1. Prepare a production budget for April, May, and June.

2. Prepare a purchases budget for April and May.

Transcribed Image Text:

Month Sales in Units April May 3,580 3,875 June 4,620 July 4,135 August 3,950