DeWitt Industries has adopted the following production budget for the first 4 months of 2020.
Each unit requires 3 pounds of raw materials costing $3 per pound. On December 31, 2019, the ending raw materials month equal to 20% of next month's production requirements. tory was 6.220 pounds.
Prepare a direct materials purchases budget by month for the first quarter.
Solution
DEWITT INDUSTRIES | |||
Direct materials Purchases Budget | |||
For the Quarter ended March | |||
January | February | March | |
Required production of Units of finished goods | 10380 | 8400 | 5440 |
Units of Raw material needed per unit of finished goods | 3 | 3 | 3 |
Units of raw material needed to meet production | 31140 | 25200 | 16320 |
Budgeted Ending Inventory (Pound) | 5040 | 3264 | 2580* |
Total Units of raw material needed | 36180 | 28464 | 18900 |
Beginning Inventory (Pound) | 6228 | 5040 | 3264 |
Units of raw material to be purchased | 29952 | 23424 | 15636 |
Unit cost of raw material | $ 3.00 | $ 3.00 | $ 3.00 |
Cost of raw material to be purchased | $ 89,856.00 | $ 70,272.00 | $ 46,908.00 |
*4300 x 3 x 20%
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