Answer:
Budgeted total cost of Direct Material purchases ($) =$ 157,800
Explanation:
<em>Raw material purchase budget is determined by adjusting the raw material usage budget for opening and closing inventory of materials.
</em>
Purchase budget = usage budgeted + closing inventory - Opening inventory
Material purchase budget = 53,000 + 2,700 - 3,100= 52,600 pounds
Note the closing inventory represents the stock of materials needed to be kept, hence it will increase the purchase budget. So we added.
On the other hand hands, the opening inventory represented what already existed , hence we subtracted it as it will reduce what will be required.
Material purchase budget ($) = purchase budget in quantity × standard price per quantity
Material purchase budget = 52,600
× $3 = $ 157,800
Budgeted total cost of Direct Material purchases ($) =$ 157,800
