Purple Inc. production budget for Product X for the year ended December 31 is as

Question

Purple Inc. production budget for Product X for the year ended December 31 is as follows:

In Purple's production operations, Materials A, B, and C are required to make Product X. The quantities of direct materials expected to be used for each unit of product are as follows:

Prepare a direct materials purchases budget for Product X, assuming that there are no beginning or ending inventories for direct materials (all units purchased are used in production).

Product X Sales 640,000     units Plus desired ending inventory   85,000 Total 725,000 Less estimated beginning inventory, Jan. 1   90,000 Total production 635,000

Explanation / Answer

MATERIAL PURCHASE BUDGET PARTICULARS A B C TOTAL Quantity used for each Unit of X 0.5 pounds 1 pound 1.2 pounds Total production of X estimated 635000 635000 635000 Total Quantity of each material required 317500 635000 762000 Price of direct materials each $0.60 $1.70 $1 Total Cost of materials 190500 1079500 762000 2032000

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