A company expects to begin the coming year with 6000 ceramic pots in finished goods inventory. It expects to sell 85000 ceramic pots and end the year with 8000 pots in the finished goods inventory. Four pounds of clay go into each ceramic pot. The company expects to have 4000 pounds of clay on hand at the beginning of the coming year and wishes to end the year with 6000 pounds in inventory.
Prepare a production budget showing the number ceramic pots that the company must manufacture to carry out these plans.
Prepare a direct materials purchases budget showing the number of pounds of clay that the company must purchase during the year and the cost of direct material purchases, given at cost of $2.34 per pound.