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

Question

Dallas Industries has adopted the following production budget for the first 4 months of 2014.

Month

Units

Month

Units

Each unit requires 4 pounds of raw materials costing $3 per pound. On December 31, 2013, the ending raw materials inventory was 9,270 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.

Month

Units

Month

Units

Explanation / Answer

Direct Materials Purchases Budget Particulars Jan Feb March April Q1 =Jan +Feb + Mar Production          10,370.00      8,110.00        5,420.00           4,180.00                        23,900.00 Total Raw Materials Required @4          41,480.00    32,440.00     21,680.00         16,720.00                        95,600.00 Opening raw Materials = Closing of Prev month             9,270.00      6,488.00        4,336.00           3,344.00                           9,270.00 Closing Raw Mat reqmt = 20%of NM Prod             6,488.00      4,336.00        3,344.00                           3,344.00 Purchases = Cl + Used in Prod -Op          38,698.00    30,288.00     20,688.00         13,376.00                        89,674.00 Purchases Cost@3        116,094.00    90,864.00     62,064.00         40,128.00                      269,022.00

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