King Corporation has the following budgeted sales for the selected six-month period: There were 7,500 units of finished goods inventory at the beginning of June. Plans are to have a finished goods inventory equal to 20% of the unit sales for the next month.
Three kilograms of direct materials are required for each unit produced. Each kilogram of material costs $20. Ending direct materials inventory equals 30% of the needs for the next month. Direct materials inventory on June 1 was 5,000 kg.
Required:
A. Prepare production budgets in units for July, August, and September.
B. Prepare a purchases budget in kilograms and dollars for July, August, and September.
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