Moreno Industries has adopted the following production budget for the first 4 mo

Question

Moreno Industries has adopted the following production budget for the first 4 months of 2011.

Each unit requires 3 pounds of raw materials costing $2 per pound. On December 31, 2010, the ending raw materials inventory was 9,000 pounds. Management wants to have a raw materials inventory at the end of the month equal to 30% of next month's production requirements.

Complete the direct materials purchases budget by month for the first quarter

Explanation / Answer

Month . . . . . .Units . . . . . Pound3x . . . . . .Cost2x
Beginning . . . . . . . . . . . . . .9,000 . . . . . .$18,000
January . . . .10,000 . . . . . . 30,000 . . . . . $60,000
February . . . .8,000 . . . . . . 24,000 . . . . . . $48,000
March . . . . . 5,000 . . . . . . 15,000 . . . . . . $30,000
April . . . . . . .4,000 . . . . . .12,000 . . . . . . $24,000

Direct Materials Budget
Month . . . Production . . . Ending Inv. . . . Beginning Inv. . Purchases
January . . . . 60,000 + (48,000 x 30%) . . . . - 18,000 . . = $ 56,400
February . . . 48,000 + (30,000 x 30%) - (48,000 x 30%) = $ 42,600
March . . . . . 30,000 + (24,000 x 30%) - (30,000 x 30%) = $ 28,200
Total Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $127,200

Related Questions

Navigate

• Browse (All)
• Browse M
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.