Homework Answers
direct material budget is part of master budget and it is generally prepared based on production budget
first we will prepare budgeted production
| Jan | Feb | Mar | Apr | |
| sales | 460 | 440 | 512 | 472 |
| Add: desired ending inventory | 110[440*25%] | 128[512*25%] | 118[472*25%] | 135[540*25%] |
| Less: Beginning inventory | 115 | 110 | 128 | 118 |
| budgeted production | 455[460+110-115] | 458 | 502 | 489 |
raw material purchase budget (in Dollars)
| Jan | Feb | Mar | 1st Quarter | |
| budgeted production | 455 | 458 | 502 | 1415 |
| Raw material required per unit | 2 LED | 2 | 2 | 2 |
| Total LED required per unit | 910[455*2] | 916 | 1004 | 2830 |
| Add: desired ending inventory of LED lights | 183.2[916*20%] | 200.8[1004*20%] | 195.6[489*2led*20%] | 195.6 |
| Less: beginning inventory | 182[910*20%] | 183.2 | 200.8 | 182 |
| budgeted purchase of raw material(units) | 911.2[910+183.2-182] | 933.6[916+200.8-183.2] | 998.8[1004+195.6-200.8] | 2843.6 |
| price per unit | $15 | $15 | $15 | $15 |
| budgeted cost of direct material purchase | $13,668[911.2*$15] | $14,004[933.6*$15] | 14,982$[998.8*$15] | $42,654 |
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