Question

Exercise 07-4 Manufacturing: Direct materials budget LO P1 Zira Co. reports the following production budget for the next four months April 536 Production (units) May 590 June 568 July 548 Each finished unit requires six 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 965 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 536 6 216 June 568 units Budgeted production (units) Materials requirements per unit Materials needed for production (lbs) 6 lbs 3.408 lbs

Answer 1

Direct Materials Purchases Budget:-
ZIRA Co.
Direct Materials Budget - Year 2
For April, May, and June
		April	May	June
	Budgeted Production (units)	536	590	568	units
	Material Requirements per unit	6	6	6	lbs
	Material needed for production (lbs)	3,216	3,540	3,408	lbs
Add:	Budgeted Ending Raw Materials Inventory (lbs) (See below)	1,062	1,022	986	lbs
	Total Material Requirements (lbs)	4,278	4,562	4,394	lbs
Less:	Beginning Materials Inventory (lbs)	965	1,062	1,022	lbs
	Material to be purchased	3,313	3,500	3,372	lbs
	Cost per lb.	$                        4.00	$            4.00	$           4.00	per lb
	Cost of raw material to be purchased	$                   13,252	$        14,002	$       13,488

*Desired Ending Materials Inventory of each month = 30% of next month's production needs of material
*Beginning Materials inventory of each month = Desired Ending Material inventory of previous month
		Following month's production needs (units)	Following month's RM needs for production (lbs)	Desired Ending Raw Materials Inventory (lbs)	Beginning Raw Materials Inventory (lbs)
		a	b = a*6 lbs	c = b*30%	d
	April	590	3,540	1,062	965	given in question
	May	568	3,408	1,022	1,062
	June	548	3,288	986	1,022

Feel free to ask any clarification, if required. Kindly provide feedback by thumbs up, if satisfied. It will be highly appreciated.
Thank you.