Question

Brief Exercise 9-4
Perine Company has 3,784 pounds of raw materials in its December 31, 2019, ending inventory. Required production for January and February of 2020 are 4,300 and 6,100 units, respectively. 4 pounds of raw materials are needed for each unit, and the estimated cost per pound is $7. Management desires an ending inventory equal to 22% of next month’s materials requirements.

Prepare the direct materials budget for January.

PERINE COMPANY
Direct Materials Budget
choose the accounting period
select an opening direct materials budget item
enter a number of units
select an item
enter the amount of pounds
select a summarizing line for the first part
enter a total amount of pounds for the first part
select between addition and deduction: select an item
enter the amount of pounds
select a summarizing line for the second part
enter a total amount of pounds for the second part
select between addition and deduction: select an item
enter the amount of pounds
select a summarizing line for the third part
enter a total amount of pounds for the third part
select an item
$enter a dollar amount
select a closing direct materials budget item
$enter a total dollar amount

Answer 1

Solution:

Perine Company
Direct materials Budget
Particulars	January
Required Production	4300
Units of raw materials needed per unit (pounds)	4
Units of raw materials needed to meet production	17200
Add: Desired ending inventory pounds (22% of next month’s materials requirements) (6100*4*22%)	5368
Total Units of materials needed	22568
Less: Beginning inventory units of Materials	3784
Units of Raw Materials to be purchased	18784
Unit Cost of Raw Materials	$7.00
Cost of Raw materials to purchased	$1,31,488