Prepare the production budget.

Soft Pillows Unlimited makes decorative throw pillows for home use The company sells the pillows to home décor retailers for $14 per pillow


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Each pillow requires 125 yards of fabric, which the company obtains at a cost of $6 per yard

The company would like to maintain an ending stock of fabric equal to 10% of the next month’s production requirements

The company would also like to maintain an ending stock of finished pillows equal to 20% of the next month’s sales


Sales (in units) are projected to be as follows for the first three months of the year:

January 100,000 February 110,000 March 115,000


Prepare the following for the 1st quarter:


1 Prepare the sales budget


2 Prepare the production budget Assume that the company anticipates selling 120,000 units in April


3 Prepare the direct materials purchases budget Assume the company needs 150,000 yards of fabric for production in April

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