Question

DeWitt Industries has adopted the following production budget for the first 4 months of 2020. Month Units Month Units January 10,170 March 5,190 February 8,470 April 4,310 Each unit requires 5 pounds of raw materials costing $3 per pound. On December 31, 2019, the ending raw materials inventory was 10,170 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.

Answer 1

Answer:

Instructions are listed below.

Explanation:

Giving the following information:

January 10,170

March 5,190

February 8,470

April 4,310

Each unit requires 5 pounds of raw materials costing $3 per pound. On December 31, 2019, the ending raw materials inventory was 10,170 pounds. Management wants to have a raw materials inventory at the end of the month equal to 20% of next month’s production requirements.

Direct material budget:

January= (10,170*5)= 50,850 pounds

Febraury= (8,470*5)= 42,350

March= (5,190*5)= 25,950

Ending inventory desired= (4,310*5*0.2)= 4,310

Beginning inventory= ( 10,170)

Total= 113,290 pounds

Total cost= 113,290*3= $339,870