Exercise 9-5 DeWitt Industries has adopted the following production budget for t

Question

Exercise 9-5 DeWitt Industries has adopted the following production budget for the first 4 months of 2017. Month Units Month Units January 10,410 March 5,350 February 8,280 April 4,480 Each unit requires 5 pounds of raw materials costing $3 per pound. On December 31, 2016, the ending raw materials inventory was 9,420 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. DEWITT INDUSTRIES Direct Materials Purchases Budget January February March : : $ $ $ $ $ $

Explanation / Answer

Jan Feb Mar 1st Quarter Production unit 10,410 8,280 5,350 24,040 (-) opening stock (9,420) (1,656) (1,070) (9,420) (+) closing stock 1,656 1,070 896 896 Direct material purchase 2,646 7,694 5,176 15,516

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