Refer to Upward Inc. in Exercise 10.26. Assume that each unit requires 4 litres of raw materials. There are 6,000 litres of raw materials on hand at January 1. Management has decided that raw materials should be 15% of next month’s production needs. Upward Inc. pays $1.50 per litre for raw materials.
Upward Inc. form Exercise 10.26
Upward Inc. has projected sales to be 10,000 units in January; 12,000 units in February; 8,000 units in March;10,000 units in April; and 12,000 units in May. There are 900 units on hand on January 1. Management has determined that it needs to carry 5% of the following month’s sales in .
REQUIRED
Prepare a raw materials budget for the first quarter, by month and in total. Include quantity of materials to purchase and cost for the purchases.
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