What is the total amount to be budgeted in pounds for direct materials to be purchased for the month?

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calistaallen5103 calistaallen5103

28-07-2022
Business

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What is the total amount to be budgeted in pounds for direct materials to be purchased for the month?

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sakshigupta4990 sakshigupta4990 · Answer 1 · 2022-08-04T23:12:53+02:00

38,880 is the total amount to be budgeted in pounds for direct materials to be purchased for the month

Option 3 - 38,880.

Production estimation purchased for the month : 870 boxes.

Each box requires 44 pounds of clay mix and a quarter hour of direct labor.

The company has 3900 pounds of clay mix in the beginning inventory and wants to have 4500 pounds in the ending inventory.

The formula for the computation of the purchase is :

Purchase in units = Usage + Desired to end material inventory units - Beginning inventory units.

So, the total amount to be budgeted in pounds for direct materials to be purchased for the month :

(870) (44) + 4500 - 3900 = 38880

Direct material budget

When the level of production has been computed, a direct material budget should be constructed to show how much material will be required for production and how much material must be purchased to meet this production requirement. The purchase will depend on both the expected use of materials and inventory levels. The direct material budget is usually accompanied by a computation of expected cash payments for materials.

The purpose of the direct materials budget is to determine the number of raw materials to be purchased each period to fulfill the production needs and to provide for adequate inventories.