Moreno Industries has adopted the following production budget for the first 4 months of 2013.
- Month Units Month Units
- January 10,000 March 5,000
- February 8,000 April 4,000
Each unit requires 3 pounds of raw materials costing $2 per pound. On December 31, 2012, the ending raw materials inventory was 9,000 pounds. Management wants to have a raw materials inventory at the end of the month equal to 30% of next month's production requirements.
Complete the direct materials purchases budget by month for the first quarter.
MORENO INDUSTRIES
- Direct Materials Purchases Budget
- For the Quarter Ending March 31, 2013
January February March
Units to be producedDirect materials per unitDesired ending direct materialsBeginning direct materialsCost per pound
Direct materials per unitUnits to be producedDesired ending direct materialsBeginning direct materialsCost per pound ×
Total pounds needed for production
Add: Desired ending direct materialsUnits to be producedDirect materials per unitBeginning direct materialsCost per pound
Total materials required
Less: Beginning direct materialsUnits to be producedDirect materials per unitDesired ending direct materialsCost per pound
Direct materials purchases
Cost per poundUnits to be producedDirect materials per unitDesired ending direct materialsBeginning direct materials × $
Total cost of direct materials purchases $