Accounting-LO.3 (Production, direct materials, and direct labor

22. LO.3 (Production, direct materials, and direct labor budgets) GerradManufacturing has projected sales of its product for the next six months as follows:JanuaryFebruaryMarchAprilMayJune300 units700 units1,000 units900 units400 units300 unitsThe finished product requires 3 pounds of raw material and 10 hours of directlabor. Gerrad tries to maintain a Finished Goods ending inventory equal to the nexttwo months of sales and a Raw Material ending inventory equal to one-half of thecurrent month’s production needs. January’s beginning inventories are expected toconform to company policy.a. Prepare a production budget for February, March, and April.b. Prepare a forecast of the units and cost of raw material that will be required forFebruary, March, and April. The expected cost per pound of raw material isexpected to be $2 in February, $2.30 in March, and $2.40 in April.c. Prepare a direct labor budget (assuming a $12 per hour rate) for February,March, and April.

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