Question

Texas Rex sells t-shirts. Expected sales for each quarter is 1000, 1200, 1500, and 2000 t-shirts at $10.00 each. They anticipate no price change.

The Direct Materials Budget tells management how much must be bought to support production and the cost of those purchases.

Plain t-shirts cost $3.00 each, and ink (for the screen printing) cost $0.20 per ounce. The factory needs one plain t-shirt and five ounces of ink for each logoed t-shirt that it produces. Texas Rex’s policy is to have 10% of the following quarter’s needs in ending inventory. The factory has 58 plain t-shirts and 390 ounces of ink on hand on January 1. At the end of the year, the desired ending inventory is 106 plain t-shirts and 530 ounces of ink.

Texas Rex, Inc.

Direct Materials Budget

For the year ending December 31, 2018

Plain t-shirts:                      Q1                          Q2                          Q3                          Q4                          Total

Units to be Produced

Direct Materials per unit_______            _______             ________           _______             ________

Production Needs          

Desired Ending Inv.         _______             _______             ________           _______             ________

Total Needs

Less Beginning Inv.          _______             _______             ________           _______             ________

Direct Materials

To be Purchased

Cost per t-shirt                  _______             _______             ________           _______             ________

Total T-shirt Purchase

Cost

Ink:                                        Q1                          Q2                          Q3                          Q4                          Total

Units to be Produced

Direct Materials per unit_______            _______             ________           _______             ________

Production Needs          

Desired Ending Inv.         _______             _______             ________           _______             ________

Total Needs

Less Beginning Inv.          _______             _______             ________           _______             ________

Direct Materials

To be Purchased

Cost per ounce                 _______             _______             ________           _______             ________

Total Ink Purchase Cost

Total Cost of

All Direct Materials

Answer 1

Units to be Produced:-

Plain T-shirts:

	Q1	Q2	Q3	Q4	Total
Units to be produced	1000	1200	1500	2000	5700
Direct Materials per unit	1	1	1	1	1
Production Needs	1000	1200	1500	2000	5700
Desired Ending Inv.	120	150	200	106	106
Total Needs	1120	1350	1700	2106	5806
Less Beginning Inv.	58	120	150	200	58
Direct Materials To be Purchased	1062	1230	1550	1906	5748
Cost per t-shirt	$3	$3	$3	$3	$3
Total T-shirt Purchase Cost	$3186	$3690	$4650	$5718	$17244

Ink:

	Q1	Q2	Q3	Q4	Total
Units to be produced	1000	1200	1500	2000	5700
Direct Materials per unit	5	5	5	5	5
Production Needs	5000	6000	4500	10000	25500
Desired Ending Inv.	600	450	1000	530	530
Total Needs	5600	6450	5500	10530	26030
Less Beginning Inv.	390	600	450	1000	390
Direct Materials To be Purchased	5210	5850	5050	9530	25640
Cost per t-shirt	$0.20	$0.20	$0.20	$0.20	$0.20
Total T-shirt Purchase Cost	$1042	$1170	$1010	$1906	$5128