Question

Selected information from the direct materials budget of Perry Inc. is provided here:

Answer 1

Answer:

Purchase of raw material budget for first quarter = $320,000

Explanation:

Given ;

Usage budget = $60,000

Opening inventory = $16,000

Rate = 40%

Purchase of raw material budget for first quarter = $50,000

To calculate the purchase of raw material budget, we use this method

Purchase of raw material budget = usage budget + closing inventory - opening inventory

But we first need to find the raw material closing inventory as;

Closing inventory for raw material = rate × Raw usage budget for second quarter

Closing inventory for raw material= 40/100% ×  $50,000

Closing inventory for raw material= $20,000

Purchase of raw material budget for first quarter = $60,000 + $20,000 - $16,000

Purchase of raw material budget for first quarter = 64,000 units

Purchase of raw material budget for first quarter = 64,000 units × $5/unit

Purchase of raw material budget for first quarter = $320,000

Answer 2

Answer:

$320,000

Explanation:

The raw material purchase budget is determined by adjusted the raw material usage budget for the opening inventory and closing inventory budget

Raw material purchase budget = usage budget + closing inventory - opening inventory

Raw material closing inventory = 40% × Raw usage budget for second quarter

= 40% ×  50,000 = 20,000

Raw material purchase budget for first quarter = 60,000 + 20,000 - 16,000

 = 64,000 units

Raw material purchase budget =64,000 units × $5/unit

= $320,000