Page 1 of 2 a Direct Materials Purchases Budget tnick Inc makes industrial solve
ID: 2509431 • Letter: P
Question
Page 1 of 2 a Direct Materials Purchases Budget tnick Inc makes industrial solvents sold in S-galon drums. Planned production in units for the first 3 months of the coming year is: lanuary 45,000 February 55,000 March 60,000 Each drum requires 6 gallons of chemicals and one plastic drum. Company policy requires that ending inventories of raw materials for each month be 20% of the next month's production needs. That policy was met for the ending inventory of December in the prior year. The cost of one gallon of chemicals is $2.00 The cost of one drum is $1.60. Required 1. Calculate the ending inventory of chemicals in gallons for December of the prior year, and for January February. What is the beginning inventory of chemicals for January? Round your answers to the nearest whole gallon. Ending inventory for December Ending inventory for January Ending inventory for February Beginning inventory for January gallons gallons gallons gallons 2. Prepare a direct materials purchases budget for chemicals for the months of January and February Round Dollar purchases to the nearest dollar. Round all the other values to the nearest whole unit. Do not include a multiplication symbol as part of your answer Patrick Inc. Direct Materials Purchases Budget Chemicals in Gallons For the Months of January and February January bruary Production in units Gallons per unit Galons for production ttp:/lexp.cengage.com/activityservice/run/html5/handler.jsp?id-d9264c69tb98afb_va0fg6..Explanation / Answer
1.ending inventory of december = 45000×6×.20= 54000gallons of chemicals, January= 55000×6×.20= 66000 gallons of chemicals, February = 60000×6×.20= 72000 gallons of chemicals. Beginning inventory of January= 54000 i.e.ending inventory of december month. 2. For the month of January 45000×6gallons of chemicals =270000+66000-54000=282000*$2= $564000. For the month of February 55000×6= 330000gallons of chemicals+ 72000-66000=336000×$2=$672000. 3. Ending inventory for December=45000×1×.2=9000drums,january = 55000×1×.20=11000drums , February= 60000×1×.20=12000drums. 4. purchase budget for January= 45000×1=45000+11000=56000-9000=47000×$1.60=$75200. Purchase budget for February= 55000×1=55000+12000=67000-11000=56000×$1.60= $89600.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.