Question

The Rouse Company has prepared a sales budget of 45,000 finished units for a 3-month period. The company has an inventory of 11,000 units of finished goods on hand at December 31 and has a target finished goods inventory of 14,000 units at the end of the succeeding quarter It takes 4 gallons of direct materials to make one unit of finished product. The company has inventory of 61,000 gallons of direct materials at December 31 and has a target ending inventory of 56,000 gallons at the end of the succeeding quarter. How many gallons of direct materials should Rouse Company purchase during the 3 months ending March 31? Select the labels and enter the amounts to calculate the direct materials (gallons) to be purchased Direct Material Purchases Budget For the 3 Months Ending March 31 Purchases to be made (in gallons) ? Choose from any list or enter any number in the input fields and then click Check Answer. All parts showing Clear All Check Answer

Answer 1

Calculating Budgeted Direct material purchase Particulars Quarter-1 Sales units 45000 Add : Closing finished goods 14000 Required units 59000 Less :Opening finished goods 11000 Production units 48000 RM per unit RM 's used 192000 Add : Closing inventory 56000 RM's need 248000 Less : Opening inventory 61000 Purchases (Gallons) 187000