Dallas Industries has adopted the following production budget for the first 4 mo
ID: 2468626 • Letter: D
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 9,360 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.
DALLAS INDUSTRIES
Direct Materials Purchases Budget
For the Quarter Ending March 31, 2014
January
February
March
Month
Units
Month
Units
January 10,460 March 5,490 February 8,290 April 4,190Explanation / Answer
Remarks January February March April Production Budget 10460 8290 5490 4190 4 pounds x production Raw material required 41840 33160 21960 16760 20 % of next month production Closing raw material 6632 4392 3352 0 equals closing inventory of previous month opening raw material 9360 6632 4392 Raw material purchase 39112 30920 20920 $ 3 per pound Cost of purchase 117336 92760 62760
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