Question

DeWitt Industries has adopted the following production budget for the first 4 months of 2020. Month Units Month Units 10,340 March 5,440 February 8,480 April 4230 Each unit requires 3 pounds of raw materials costing $4 per pound On December 31, 2019, the ending raw materials imventory was 6,204 pounds Management wants to have a raw materials inventory at the end of the month equal to 20% of next month's production requirements Prepare a direct materials purchases budget by month for the first quarter

Answer 1

Direct Materials Purchases Budget:-
DeWitt Imdustries
Direct Materials Budget
For First Quarter
		January	February	March
	Budgeted Production (units)	10,340	8,480	5,440	units
	Material Requirements per unit	3	3	3	lbs
	Material needed for production (lbs)	31,020	25,440	16,320	lbs
Add:	Budgeted Ending Raw Materials Inventory (lbs) (See below)	7,632	4,896	3,807	lbs
	Total Material Requirements (lbs)	38,652	30,336	20,127	lbs
Less:	Beginning Materials Inventory (lbs)	6,204	7,632	4,896	lbs
	Material to be purchased	32,448	22,704	15,231	lbs
	Cost per lb.	$                        4.00	$            4.00	$           4.00	per lb
	Cost of raw material to be purchased	$                 129,792	$        90,816	$       60,924

*Desired Ending Materials Inventory of each month = 20% 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*3 lbs	c = b*20%	d
	January	8,480	25,440	7,632	6,204	given in question
	February	5,440	16,320	4,896	7,632
	March	4,230	12,690	3,807	4,896

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