E$8-21($Algo$)$ Preparing Production and Direct Materials Purchases Budgets $[$LO $8-3$b$,$ c$]$

Galactic Incorporated manufactures flying drone toys. Sales units for January, February, March, April, and May were $420,400,472,432,$ and $500$ respectively.

Required:

$1.$ The company's policy for ending finished goods is $25$ percent of next month's sales. Determine production budget for the first quarter.

$2.$ The drone toy includes $2$ LED lights, which cost $\backslash (\backslash$$ $15\backslash )$ each. The company requires ending direct materials to be $20$ percent of next month's materials requirement. Determine direct materials purchases budget with respect to LED lights for the first quarter.

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The company's policy for ending finished goods is $25$ percent of next month's sales. Determine production budget for the first quarter.