Yang Company has budgeted the following unit sales:
2008 Units
January 10,000
February 8,000
March 9,000
April 11,000
May 15,000
The finished goods units on hand on December 31, 2007, was 2,000 units. Each unit requires 3 pounds of raw materials which is estimated to cost an average of $4 per pound. It is the company's policy to maintain a finished goods inventory at the end of each month equal to 20% of next month's anticipated sales. They also have a policy of maintaining a raw materials inventory at the end of each month equal to 30% of the pounds needed for the following month's production. There were 8,640 pounds of raw materials on hand at December 31, 2007.
For the first quarter of 2008, prepare (1) a production budget and (2) a direct materials budget.