Question

1. Langer Company produces plastic items, including plastic housings for humidifiers. Each housing requires about 17 ounces of plastic costing $0.16 per ounce. Langer molds the plastic into the proper shape. Langer has budgeted production of the housings for the next 4 months as follows:

   	Units
   July	3,500
   August	4,400
   September	4,900
   October	6,300

   Inventory policy requires that sufficient plastic be in ending monthly inventory to satisfy 30% of the following month's production needs. The inventory of plastic at the beginning of July equals exactly the amount needed to satisfy the inventory policy.

   Required:

   Prepare a direct materials purchases budget for July, August, and September, showing purchases in units and in dollars for each month and in total. If required, round the total purchase cost to nearest whole value.

   Langer Company
   Direct Materials Purchases Budget
   For July, August and September
   	July	August	September	Total
   Units to be produced
   Direct materials per unit (ounces)
   Production needs
   Desired ending inventory (ounces)
   Total needs
   Less: Beginning inventory
   Direct materials to be purchased (ounces)
   Cost per ounce	$0.16	$0.16	$0.16	$0.16
   Total purchase cost	$	$	$	$

Answer 1