Question

Miami Solar manufactures solar panels for industrial use. The company budgets production of 5,800 units (solar panels) in July and 5,400 units in August Each unit requires 4 pounds of direct materials, which cost $7 per pound. The company's policy is to maintain direct materials inventory equal to 30 % of the next month's direct materials requirement. As of June 30, the company has 6,960 pounds of direct materials in inventory, which complies with the policy. Prepare a direct materials budget for July. MIAMI SOLAR Direct Materials Budget For Month Ended July 31 Budget production (units) 5,800 Materials needed for production (Ibs.) Total materials requirements (Ibs.) Materials to be purchased (lbs.) Budgeted cost of direct materials purchases

Answer 1

Calculating Budgeted Direct material for July July 5800 August 5400 216000 Particulars Production units RM per unit RM's used Add : Closing inventory RM 's need Less : Opening inventory Purchases Price per pound Purchase Cost of RM 23200 6480 12280 6960 5320 $7 $37,240

Calculating Budgeted Labor cost Particulars July Estimated Units 5800 Labor hours per Unit 3.00 Total Labour hours 17400 Rate per hour $ 15 Total Labour Cost $ 261,000