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
<u>Direct material budget January:</u>
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
