nt Your answer is partially correct. Try again. DeWitt Industries has adopted th

Question

nt Your answer is partially correct. Try again. DeWitt Industries has adopted the following production budget for the first 4 months of 2017. MonthUnits January February Month Units 10,270 March 8,270 April 5,390 4,290 s of raw materials costing $3 per pound. On December 31, 2016, the ending raw materials inventory was 9,320 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 Units to be

Explanation / Answer

Solution - Direct Material Purchase budget

Dewitt Industries

Direct Material Purchase Budget

For the quarter ending March 31, 2017

4962

(24810 * 20%)

3234

(16170 * 20%)

2574

(4290 * 3) * 20%

Note : Ending Direct Material is 20% of next month production requirement hence Production requirement is always (units produced * Raw material per unit production) hence 20% will not be of units produced and will be of total raw material required for production.

Particulars January February March Units to be produced 10270 8270 5390 Direct Material per unit 3 3 3 Total pound needed for production 30810 24810 16170 Add : Desired ending Direct Material (See note)

4962

(24810 * 20%)

3234

(16170 * 20%)

2574

(4290 * 3) * 20%

Total Direct Material pound required 35772 28044 18748 Less : Beginning Direct Materials 9320 (given in question) 4962 (Closing raw material inventory of january) 3234 (closing raw material inventory of February) Direct Material Purchases 26452 23082 15514 Cost per pound $3 $3 $3 Total cost of Direct Material purchases $79356 $69246 $46542

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