Question

Sherman has budgeted sales for the upcoming quarter as follows: April May June Units 1,600 1,900 1,750 The desired ending finished goods inventory for each month is one-half of next month's budgeted sales. Three pounds of direct material are required for each unit produced. If direct material costs $5 per pound, and must be paid for in the month of purchase, the budgeted direct materials purchases (in dollars) for April are:

Answer 1

Answer:

$26,250

Explanation:

Beginning inventory:

= 1/2 × 1,600 × 3 × $5

= 12,000

COGS = 1,600 × 3 × $5

           = $24,000

Ending inventory = 1/2 × 1,900 × 3 × $5

                             = $14,250

Beginning Inventory + purchases - COGS = Ending Inventory

Purchases = Ending Inventory - Beginning Inventory + COGS

                   = $14,250 - 12,000 + $24,000

                   = $26,250