Question

Perine Company has 4,484 pounds of raw materials in its December 31, 2016, ending inventory. Required production for January and February of 2017 are 4,270 and 5,890 units, respectively. 5 pounds of raw materials are needed for each unit, and the estimated cost per pound is $7. Management desires an ending inventory equal to 21% of next month's materials requirements. Prepare the direct materials budget for January. (Round intermediate calculations and final answer to O decimal places, e.g. 5,275.)

Answer 1

Direct Material Budget
For the Month Ending January 31, 2017
Units to be produced	4270
Direct Materials per unit	5
Total pounds required for production	21350
Add: Desired ending inventory	6185	=5890*5*21%
Total materials required	27535
Less: Beginning materials Inventory	4484
Direct Materials purchases	23051
Cost per pound	7
Total cost of direct materials purchases	161357