Question

Tall Oak, Inc produces rulers from plastic resin. Tall Oak has estimated production and sales of rulers in units for the next 2 months as:

                                             May               June

Estimated productiuon:        42,000        48,000

Estimated sales:                  50,000        36,000

Each ruler requires 0.25 pounds of resin. The cost of resin is $4.50 per pound. Tall Oaks wants to have 20% of the next months materials requirements on hand at the end of each month.

Prepare a direct materials purchases budget for the month of May.

Answer 1