1.

Devers Corporation’s budget calls for the following sales for next year:

Quarter 1 Quarter 2 Quarter 3 Quarter 4

45,000 units 38,000 units 34,000 units 48,000 units
Each unit of the product requires 3 pounds of direct material. The company’s policy is to begin
each quarter with an inventory of the product equal to 10 percent of that quarter’s sales
requirements and an inventory of direct materials equal to 20 percent of that quarter’s direct
materials requirements for production.

Required Determine the production and materials purchases budgets for the second and third
quarter.

2. Hester Company budgets on an annual basis for its fiscal year. The following beginning
and ending inventory levels (in units) are planned for the fiscal year of July 1, 2004
through June 30, 2005.
7-1-04 6-30-05
Raw material 1
40,000 10,000
Work in process 8,000 8,000
Finished goods 30,000 5,000
1
Three (3) units of raw material are needed to produce each unit of finished product.

Required: If 450,000 finished units were to be manufactured during the 2004–2005 fiscal year
by Hester Company, the units of raw material needed to be purchased would be: