Question

Zira Co. reports the following production budget for the next four months. Production (units) April 455 May 570 June 560 July 540 Each finished unit requires five pounds of raw materials and the company wants to end each month with raw materials inventory equal to 30% of next month's production needs. Beginning raw materials inventory for April was 663 pounds. Assume direct materials cost $4 per pound. Prepare a direct materials budget for April, May, and June. ZIRA CO. Direct Materials Budget For April, May, and June April May June Materials needed for production (lbs.) Total materials requirements (lbs.) 1 Materials to be purchased (lbs.) Total budgeted direct materials cost

Answer 1

Direct material budget

	April	May	June
Production unit	455	570	560
Unit of material needed	5	5	5
Material needed for production	2275	2850	2800
Add: Desired ending inventory	855	840	810
Total material requirement	3130	3690	3610
Less: Beginning inventory	-663	-855	-840
Material to be purchased	2467	2835	2770
Cost per pound	4	4	4
Total budgeted direct material cost	9868	11340	11080