Question

Yosko expects to pfroduce 1,900 units in January and 2,120 units in February. The company budgets 2 pounds per unit of direct materials at a cost of $45 per pound. Indirect materials are insignificant and not considered for budgeting purposes. The balance in the rw materials inventory account (all direct materials) on January 1 is 5,800 pounds. Yosko desires the ending balance in Raw Materials inventory to be 60% of the next month's direct materials needed for production. Desired ending balance for February is 4,70 pounds. Prepare Yosko's direct materials budget for January and February. Begin by preparing the direct materials budget for January and February through total direct materials needed line and then complete the budget by calculating the budgeted cost of diect materials purchases.

Answer 1

Direct material purchase budget
	January	February
Expected Production - units	1900	2120
Direct material required per unit - pounds	2	2
Total Direct material required for production	3800	4240
Add: Desired ending inventory - pounds	2544	4700
Total Direct material needed - pounds	6344	8940
Less: Beginning inventory - pounds	5800	2544
Budgeted purchase of direct material - pounds	544	6396
Direct material cost per pound - $	45	45
Budgeted direct materil purchaases - dollars	24480	287820

If the ending inventory for February is 470 pounds , the following will be the purchase budget.

Direct material purchase budget
	January	February
Expected Production - units	1900	2120
Direct material required per unit - pounds	2	2
Total Direct material required for production	3800	4240
Add: Desired ending inventory - pounds	2544	470
Total Direct material needed - pounds	6344	4710
Less: Beginning inventory - pounds	5800	2544
Budgeted purchase of direct material - pounds	544	2166
Direct material cost per pound - $	45	45
Budgeted direct materil purchaases - dollars	24480	97470