Question

 

When preparing a direct materials budget, the required purchases of raw materials in units equals

Multiple Choice

• raw materials needed to meet the production schedule+ desired ending inventory of raw materials -beginning inventory of raw materials.
• raw materials needed to meet the production schedule - desired ending inventory of raw materials inventory of raw materials beginning
• raw materials needed to meet the production schedule - desired ending inventory of raw materials beginning inventory of raw materials.
• raw materials needed to meet the production schedule + desired ending inventory of raw materials+ beginning inventory of raw materials.

Answer 1

Raw materials purchase budget:

A raw material purchases budget is one of the operating budgets. It is one of the operating activities from which production can be possible. It is prepared basing on the required number of units for the production activity. It is the total of materials required for production and ending inventory less the beginning inventory of raw materials.

Required purchases of raw materials in units \(=\left(\begin{array}{l}\text { Raw materials needed to meet the } \\ \text { production schedule }+ \\ \text { desired ending inventory of raw materials } \\ \text { -beginning inventory of raw materials }\end{array}\right)\)