Question

1. Direct Materials Purchases Budget

   FlashKick Company manufactures and sells soccer balls for teams of children in elementary and high school. FlashKick’s best-selling lines are the practice ball line (durable soccer balls for training and practice) and the match ball line (high-performance soccer balls used in games). In the first four months of next year, FlashKick expects to sell the following:

   	Practice Balls				Match Balls
   	Units		Selling Price		Units		Selling Price
   January	50,000		$8.75		7,000		$16.00
   February	58,000		$8.75		7,500		$16.00
   March	80,000		$8.75		13,000		$16.00
   April	100,000		$8.75		18,000		$16.00

   Every practice ball requires 0.7 square yard of polyvinyl chloride panels, one bladder with valve (to fill with air), and 3 ounces of glue. FlashKick’s policy is that 20 percent of the following month’s production needs for raw materials be in ending inventory. Beginning inventory in January for all raw materials met this requirement.

   Required:

   Construct a direct materials purchases budget for each type of raw materials for the practice ball line for January and February of the coming year. If required, round your answers to the nearest cent.

   Direct materials purchases budget for polyvinyl chloride panels:

   FlashKick Company
   Direct Materials Purchases Budget - Polyvinyl Chloride Panels
   For January and February
   Polyvinyl chloride panels:	January	February
   Units produced
   Desired ending inventory Direct materials for production Direct materials per unit Direct materials purchases Less: Beginning inventory Units produced
   Direct materials for production
   Desired ending inventory Direct materials for production Direct materials per unit Direct materials purchases Less: Beginning inventory Units produced
   Total needed
   Desired ending inventory Direct materials for production Direct materials per unit Direct materials purchases Less: Beginning inventory Units produced
   Direct materials purchases

   Feedback

   The direct materials purchases budget is similar in format to the production budget; it is based on the amount of materials needed for production and the inventories of direct materials. The purchases amount can be determined by considering beginning and ending (desired) inventory amounts. Also, consider expected usage.

   Direct materials purchases budget for bladder and valve:

   FlashKick Company
   Direct Materials Purchases Budget - Bladder and Valve
   For January and February
   Bladder and valve:	January	February
   Units produced
   Desired ending inventory Direct materials for production Direct materials per unit Direct materials purchases Less: Beginning inventory Units produced
   Direct materials for production
   Desired ending inventory Direct materials for production Direct materials per unit Direct materials purchases Less: Beginning inventory Units produced
   Total needed
   Desired ending inventory Direct materials for production Direct materials per unit Direct materials purchases Less: Beginning inventory Units produced
   Direct materials purchases

   Feedback

   The direct materials purchases budget is similar in format to the production budget; it is based on the amount of materials needed for production and the inventories of direct materials. Purchases = Expected usage +Desired ending inventory of direct materials – Beginning inventory of direct materials

   Direct materials purchases budget for glue:

   FlashKick Company
   Direct Materials Purchases Budget - Glue
   For January and February
   Glue:	January	February
   Units produced
   Desired ending inventory Direct materials for production Direct materials per unit Direct materials purchases Less: Beginning inventory Units produced
   Direct materials for production
   Desired ending inventory Direct materials for production Direct materials per unit Direct materials purchases Less: Beginning inventory Units produced
   Total needed
   Desired ending inventory Direct materials for production Direct materials per unit Direct materials purchases Less: Beginning inventory Units produced
   Direct materials purchases

   Feedback

   The direct materials purchases budget is similar in format to the production budget; it is based on the amount of materials needed for production and the inventories of direct materials. Purchases = Expected usage +Desired ending inventory of direct materials – Beginning inventory of direct materials

Answer 1

Raw material purchase budget of polyvinyl chloride panel

Particulars		January	February	March
Expected sale of practise ball		50,000	58,000	80,000
× square yard of polyvinyl chloride panels needed per practise ball		0.7	0.7	0.7
Square yard of polyvinyl chloride needed		35,000	40,600	56,000
Add - closing inventory of polyvinyl chloride needed (20% or following months units needed)		8120	11200
Less - opening inventory of polyvinyl chloride needed (20% of current months units needed)		7000	8120
Purchase budget for month		36120	43680

Direct material purchase budget for bladder and valve

Particulars	January	February	March
Expected sales of practise balls	50,000	58,000	80,000
× No. of bladder and valve needed per practise ball	1	1	1
No. Of bladder and valve needed for the month	50,000	58,000	80,000
Add - closing inventory of bladder and valve (20% of next months requirement)	11,600	16,000
Less- opening inventory of bladder and valve (20% of current months requirement)	10,000	11,600
Purchase budget for month	51,600	62,400

Direct Material purchase budget for glue

Particulars	January	Febraury	March
Expected sale of practise balls	50,000	58,000	80,000
× ounce of glue needed per practise ball	3	3	3
Total ounce of glue needed for the month	1,50,000	1,74,000	2,40,000
Add - Closing inventory of glue (20% of next months requiremnt)	34,800	48,000
Less - Opening inventory of glue {20% of Current months requirement)	30,000	34,800
Purchase budget of ounce of glue	1,54,800	1,87,200