Question: Moreno Industries has adopted the following production budget for the first 4 months of 2011.
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, 2010, 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, 2011
January February March
Total pounds needed for production
Add:
Total materials required
Less:
Direct materials purchases
Total cost of direct materials purchases