Question

Tableau DA 20-1: Quick Study, Direct materials budget LO P1

Delray Manufacturing needs to better budget and analyze costs. While Delray has experienced high sales growth, it has struggled to effectively manage costs and inventories. Delray aims to end each month with direct materials inventory equal to 40% of next month's production needs. Each finished unit requires 4 pounds of direct materials and 2 hours of direct labor. Delray budgets $12,000 of fixed overhead costs per month. A Tableau Dashboard is provided to aid our analysis. Sales Forecast & Production Budget (in Units) 1,500 Budgeted Production Sales Forecast 1,200+ Budgeted Production 900+ Sales Forecast 300+ April May June July Ending Direct Materials Inventory by Month March April Solve for this value H May Solve for this value June Solve for this value 400 1600 2000 800 1200 Direct Materials (Pounds)

Answer 1

DELRAY MANUFACTURING Direct Materials Needed For April, May and June April May Budgeted production (units) 880 1,100 Pounds required per unit 4 Materials needed for production 3,520 4,400 June 1,075 (a) --> (b) --> (a) x (b) 4,300 2) 880 DELRAY MANUFACTURING Direct Materials Budget For April Budgeted production (units) Pounds required per unit Materials needed for production (lbs) Add: Desired ending inventory (lbs) Total materials requirement (lbs) Less: Beginning inventory (lbs) Materials to be purchased (lbs) Material price pound Budgeted cost of direct materials purchase [880 units x 4 pounds] (40% of May's materials needed = 4400 x 40%] 3,520 1,760 5,280 1,408 3,872 $2 $7,744 [40% of April's materials needed = 3520 x 40%] [Assumed price as data for this is not given] (3872 pounds x $2]