Question

1. The purpose of preparing a direct materials budget is to ________. a. allocate the cost of raw materials to production departments.b. estimate the manufacturing overhead. c. estimate the quantity of raw materials to be purchased. d. estimate the unit cost of direct materials to be purchased.2. In a direct materials budget, the desired ending raw materials inventory for the year is equal to the ________. a. beginning balance of accounts payable.b. desired ending raw materials inventory for the last period.c. total merchandise purchased during the year.d. value of raw material used during the year.

Answer 1

Answer:

1. Option c is correct option.

2. Option b is correct option.

Explanation:

Part 1. Direct material budget is prepared for  estimating the quantity of raw materials to be purchased. Following is the formula used for the computation of direct material budget:

D. Raw Material required to be purchased = Raw Material required for production + Desired closing Raw material for the last year - Opening Raw Material

Part 2. The desired ending raw material inventory for the last period.

And this is evident from the formula in the part 1 which tells that the desired closing raw material is that of the last year.