Yada expects to produce 1,650 units in January and 2,186 units in FebruaryFebrua
ID: 2561516 • Letter: Y
Question
Yada expects to produce 1,650 units in January and 2,186 units in FebruaryFebruary. The company budgets $40 per unit for direct materials. 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 $46,500. Yada 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 $48,500. Prepare Yada'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 purchases of direct materials.
Yada Company
Direct Materials Budget
Two Months Ended January 31 and February 28
January
February
Budgeted units to be produced
Direct materials cost per unit
Direct materials needed for production
Plus:
Desired direct materials in ending inventory
Total direct materials needed
Less:
Direct materials in beginning inventory
Budgeted purchases of direct materials
Yada Company
Direct Materials Budget
Two Months Ended January 31 and February 28
January
February
Budgeted units to be produced
Direct materials cost per unit
Direct materials needed for production
Plus:
Desired direct materials in ending inventory
Total direct materials needed
Explanation / Answer
Direct material budget January February Number of units produced 1,650 2,186 Direct material cost per unit 40 40 Production needs 66,000 87,440 Add ending material inventory 34976 48500 Total material requirements 100976 135940 Less beginning material inventory 46500 34976 Direct Material to be purchased 54476 100964
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