Retro, Inc Each Unit Requires Three Pounds of Material Costing £2 Per

question 28

Essay

Retro, Inc., produces a single product. The projected sales for the first month of the coming year and the beginning and ending inventory data are as follows: $\begin{array}{lr}\text { Sales } & 80,000 \text { units } \\\text { Unit price } & £ 12 \\\text { Beginning inventory } & 6,000 \text { units } \\\text { Desired ending inventory } & 9,000 \text { units }\end{array}$ Each unit requires three pounds of material costing £2 per pound. The beginning inventory of raw materials is 2,500 pounds, and the company wants to have 4,500 pounds of material in inventory at the end of the month. Each unit requires one hour of direct labour time, which is billed at £8 per hour.
a.Prepare a production budget for the first month.
b.Prepare a direct materials purchases budget for the first month.

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