Tonga Toys manufactures and distributes a number of products to retailers. One of these products, Playclay, requires five pounds of material
A135 in the manufacture of each unit. The company is now planning raw materials needs for the third quarter”July, August, and September. Peak
sales of Playclay occur in the third quarter of each year. To keep production and shipments moving smoothly, the company has the following
inventory requirements:

The finished goods inventory on hand at the end of each month must be equal to 6,000 units plus 29% of the next month’s sales. The finished
goods inventory on June 30 is budgeted to be 19,920 units.

The raw materials inventory on hand at the end of each month must be equal to one-half of the following month’s production needs for raw
materials. The raw materials inventory on June 30 for material A135 is budgeted to be 127,250 pounds.