Question

The following information is from the manufacturing budget and budgeted financial statements of Ulta Corp.:

Direct materials inventory, 1/1	$	95,000
Direct materials inventory, 12/31	$	111,000
Direct materials budgeted for use during year	$	353,000
Accounts payable to suppliers, 1/1	$	63,000
Accounts payable to suppliers, 12/31	$	73,000

1. For the year, budgeted purchases of direct materials amounted to?

2. For the year, budgeted cash payments to suppliers amounted to?

Answer 1

Answer to Question 1:

Budgeted Direct materials to be use during the year is $ 3,53,000

Out of these we have opening inventory of Direct Material amounting $ 95,000.

Further, We have Ending Inventory of Direct Material amounting $ 1,11,000

Therefore, Budgeted Direct material to be purchased as follows:

Particulars	Amount
Budgeted Direct Material to be Use	$              3,53,000
Less: Direct Material opening Inventory	$                  95,000
Add: Direct Material closing Inventory	$              1,11,000
Budgeted purchases of direct materials	$              3,69,000

Therefore, Budgeted Direct material to be purchased is $ 3,69,000.

Answer to Question 2:

On the basis of Budgeted purchases of direct material & Accounts payable information we will calculate budgeted cash payments to suppliers during the year as follows:

Particulars	Amount
Budgeted purchases of direct materials	$              3,69,000
Add: Opening Accounts Payable	$                  63,000
Total Amount payable to suppliers	$              4,32,000
Less: Closing Accounts Payable	$                  73,000
Budgeted cash payments to suppliers	$              3,59,000

Therefore, Budgeted cash payments to suppliers during the year is $ 3,59,000