Smith Company has budgeted the following unit sales:

Smith Company has budgeted the following unit sales:

                           2015                                      Units

                        January                                 10,000

                        February                                  8,000

                        March                                       9,000

                        April                                        11,000

                        May                                        15,000

The finished goods units on hand on December 31, 2014, was 1,000 units. Each unit requires 2 pounds of raw materials that are estimated to cost an average of $3 per pound. It is the company's policy to maintain a finished goods inventory at the end of each month equal to 10% of next month's anticipated sales. They also have a policy of maintaining a raw materials inventory at the end of each month equal to 20% of the pounds needed for the following month's production. There were 3,920 pounds of raw materials on hand at December 31, 2014