Answer:
Instructions are below.
Explanation:
Giving the following information:
Beginning inventory= 5,220 pounds
Production:
January= 4,500 units
February= 5,900 units
4 pounds of raw materials are needed for each unit
The estimated cost per pound is $7.
Management desires an ending inventory equal to 29% of next month’s materials requirements.
First, we need to calculate the number of pounds needed for each month:
January= 4,500*4= 18,000 pounds
February= 5,900*4= 23,600 pounds
Direct material budget January:
Production= 18,000
Desired ending inventory= (0.29*23,600)= 6,844
Beginning inventory= (5,220)
Total pounds= 19,624
Total cost= 19,624*7= $137,368
Answer:
$137,368
Explanation:
Direct material are the raw material which is specifically used for the production of the unit. Direct material cost is directly attributable to the product.
As per given data
Beginning inventory= 5,220 pounds
Production:
January 2020 = 4,500 units
February 2020 = 5,900 units
Each unit require 4 pounds of raw materials
Material for production
January 2020 = 4,500 units x 4 Pound per unit = 18,000 pounds
February 2020 = 5,900 units x 4 Pound per unit = 23,600 pounds
Estimated cost is $7 per pound.
January 2020 = 18,000 pounds x $7 = $126,000
February 2020 = 23,600 pounds x $7 = $165,200
Ending inventory is 29% of next month’s materials requirements.
Ending Inventory
Direct material budget January:
Ending inventory= 23,600 x 29% = 6,844 pounds
Beginning inventory= 5,220 pounds
Purchases = Production + Ending Inventory - Beginning Inventory
Purchases = 18,000 + 6,844 - 5,220 = 19,624 pounds
Total cost= 19,624 x $7= $137,368
