Question

Pronghorn Industries has adopted the following production budget for the first 4 months of 2017. Month Units Month Units January 10,170 March 5,190 February 8,470 April 4,310 Each unit requires 5 pounds of raw materials costing $3 per pound. On December 31, 2016, the ending raw materials inventory was 9,100 pounds. Management wants to have a raw materials inventory at the end of the month equal to 20% of next month’s production requirements. Prepare a direct materials purchases budget by month for the first quarter. PRONGHORN INDUSTRIES Direct Materials Purchases Budget January February March : : $ $ $ $ $ $

Answer 1

Direct Materials Purchases Budget
For the Quarter Ending March 31, 2017
	January	February	March
Units to be produced	10170	8470	5190
Direct materials per unit	5	5	5
Total pounds needed for production	50850	42350	25950
Add: Desired ending direct materials	8470	5190	4310
Total materials required	59320	47540	30260
Less: Beginning direct materials	9100	8470	5190
Direct materials purchases	50220	39070	25070
Cost per pound	3.00	3.00	3.00
Total cost of direct materials purchases	150660	117210	75210