Johnson Co. is preparing its master budget for the first quarter of the next year. Budgeted sales and production for one of the companys products are as follows:

Months Sales Production

January 10,000 12,000

February 12,000 11,000

March 15,000 16,000

Each unit of this product requires four pounds of raw materials. Johnsons policy is to have sufficient raw materials on hand at the end of each month for 40% of the following months production requirements. The January 1 raw materials inventory is expected to conform with this policy.

How many pounds of raw materials should Johnson budget to purchase for January? Please show work.

a) 46,400

b) 65,600

c) 48,000

d) 11,600