Question

Smoke, Inc. makes and sells buckets. Each bucket uses 1/2 pound of plastic. Budgeted production of buckets in units for the next three months is as follows: April May June Budgeted production 21,000 22,000 24,000 The company wants to maintain monthly ending inventories of plastic equal to 25% of the following month's budgeted production needs. The cost of plastic is $2.20 per pound. Prepare a direct materials purchases budget for the month of May. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round pounds of plastic needed for each bucket to 1 decimal palce and cost per pound to two decimal palces.) : : $

Answer 1

Answer:

total budgeted direct materials = $24,750

Explanation:

production budget x materials needed:

April = 21,000 x 0.5 lbs = 10,500 pounds

May = 22,000 x 0.5 lbs = 11,000 pounds

June = 24,000 x 0.5 lbs = 12,000 pounds

• beginning inventory = 11,000 x 25% = 2,750 lbs
• production requirements = 11,000 lbs
• ending inventory = 12,000 x 25% = 3,000 lbs

direct materials budget May:

budgeted production                          22,000 units

materials per unit                                0.5 lbs

materials needed for production       11,000 lbs

budgeted ending inventory                3,000 lbs

budgeted beginning inventory          2,750 lbs.

materials to be purchased                 11,000 + 3,000 - 2,750 = 11,250 lbs

price per pound                                  $2.20

total budgeted direct materials         $24,750