Yosko expects to produce 1,650 units in January and 2,110 units in February. The

Question

Yosko expects to produce 1,650 units in January and 2,110 units in February. The company budgets 5 pounds per unit of direct materials at a cost of $55 per pound. Indirect materials are insignificant and not considered for budgeting purposes. The balance in the Raw Materials Inventory account (all direct materials) on January 1 is 5,300 pounds. Yosko desires the ending balance in Raw Materials Inventory to be 40% of the next month's direct materials needed for production. Desired ending balance for February is 4,500 pounds. Prepare Yosko's direct materials budget for January and February. Begin by preparing the direct materials budget for January and February through total direct materials needed line and then complete the budget by calculating the budgeted cost of direct materials purchases. Yosko Company Direct Materials Budget Two Months Ended January 31 and February 28 January February Direct materials (pounds) per unit Direct materials needed for production Plus: Total direct materials needed Less Budgeted purchases of direct materials Direct materials cost per pound Budgeted cost of direct materials purchases

Explanation / Answer

January February budgeted production 1,650 2,110 Direct materials (pounds )per unit 5 5 direct materials need for production 8250 10550 plus:Desired ending inventory 4220 4,500 total direct materials needed 12470 15050 less:Beginning inventory 5,300 4,220 budgeted purchase of direct materials 7,170 10,830 direct materials cost per pound 55 55 Budgeted cost of direct material purchases 394350 595650

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