Question

Jordan Company makes and sells a single product. It takes four pounds of direct materials to produce one unit of this product. The budgeted units to be produced for the next three months is given below: Budgeted Units to be Produced September 22,400 units October 31,900 units November 26,100 units Jordan Company wants to maintain monthly ending inventories of direct materials that are equal to 18% of the following month's production needs. The cost of direct materials is $2.75 per pound. Calculate the total cost of direct materials budgeted to be purchased in September.

Answer 1

Total cost of direct materials budgeted to be purchased in September= $265,210

Working

Jordan Company
Direct Materials Budget
	September	October
Budgeted production (units)	22400	31900
Materials requirements per unit	4	4
Materials needed for production (lbs.)	89600	127600
Budgeted ending inventory (lbs.)	22968
Total materials requirements (lbs.)	112568
Beginning inventory (lbs.)	-16128
Materials to be purchased (lbs.)	96440
Cost per lb.	$ 2.75
Total budgeted direct materials cost	$ 265,210