Question

Toddler Toys manufactures and distributes a product called Playclay that requires three pounds of material A135 in the manufacture of each unit. The company is now planning raw materials needs for the third quarter. To keep production and shipments moving smoothly, the company has the following inventory requirements: 1. The raw materials inventory on hand at the end of each month must be equal to 5,000 pounds plus one- half of the following month's production needs for raw materials. The raw materials inventory on June 30 for material A135 is planned to be 64,500 pounds. Prepare a direct materials budget showing the quantity of material A135 to be purchased for the month of AUGUST based on the production budget shown below. August September July 40,000 Production budget (toy units) 50,000 70,000 A135 Purchases (pounds) Answer:

Answer 1

	July	Aug	Sept
Production Budget	40,000	50,000	70,000
Raw Materilas Requirement	120,000	150,000	210,000
Closing stock	80,000	110,000
opening stock	64,500	80,000	110,000
Purchase reqd		180,000