Question

Exercise 07-4 Manufacturing: Direct materials budget LO P1 Zira Co. reports the following production budget for the next four months. April May 615 June July 587 Production (units) 574 607 Each finished unit requires five pounds of raw materials and the company wants to end each month with raw materials inventory equal to 40% of next month's production needs. Beginning raw materials inventory for April was 1,148 pounds. Assume direct materials cost $4 per pound. Prepare a direct materials budget for April, May, and June. (Round your intermediate calculations and final answers to the nearest whole dollar amount.) ZIRA CO. Direct Materials Budget For April, May, and June April May June Materials needed for production (Ibs.) Total materials requirements (Ibs.) Materials to be purchased (Ibs.) Total budgeted direct materials cost

Answer 1

Material Budget = Material needed for Production + Ending inventory - Beginning inventory

Zira co

Direct Material Budget

Particulars	April	May	June	July
Budgeted production	574	615	607	587
Material per unit	5	5	5	5
Material needed for production	2870	3075	3035	2935
Budgeted ending inventory (40% of next Month's production needs)	1230	1214	1174
Total material requirements	4100	4289	4209
Beginning inventory	1148	1230	1214
Materials to be purchased	2952	3059	2995
Cost per lb	4	4	4
Total budgeted direct Material cost	10368	12236	11980