Dallas Industries has adopted the following production budget for the first 4 mo

Question

Dallas Industries has adopted the following production budget for the first 4 months of 2014. Month Units Month Units January 10,280 March 5,270 February 8,360 April 4,330 Each unit requires 4 pounds of raw materials costing $3 per pound. On December 31, 2013, the ending raw materials inventory was 9,390 pounds. Management wants to have a raw materials inventory at the end of the month equal to 20% of next month’s production requirements. Prepare a direct materials purchases budget by month for the first quarter.

Having touble filling in the chart

DALLAS INDUSTRIES Direct Materials Purchases Budget For the Quarter Ending March 31, 2014 January February March Units to be Produced 10280 8360 5270 Direct Materials Per Unit 4 4 4 Total Pounds Needed for Production 41120 33440 21080 Add Desired Ending Direct Materials Total Materials Required Less Beginning Direct Materials 9390 Direct Materials Purchases Cost Per Pound Total Cost of Direct Materials Purchases

Explanation / Answer

Total Production for 1st Quarter = 10280 + 5270 + 8360 = 23910

Total Materials Required for consumption = 23910 * 4 = 95640 pounds

Opening stock = 9390 pounds

Closing stock = 4330 * 4 * 20 % = 3464 pounds

Month Production RM Required Opening Stock Closing Stock Purchases Purchase Value A B C = B * 4 D E = 20% of C of succeding month F = C+E-D F * 3 January 10280 41120 9390 4216 35946 107838 February 5270 21080 4216 6688 23552 70656 March 8360 33440 6688 3464 30216 90648 TOTAL 23910 95640 20294 14368 89714 269142

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