Brief Exercise 9-4 Perine Company has 2,000 pounds of raw materials in its Decem

Question

Brief Exercise 9-4 Perine Company has 2,000 pounds of raw materials in its December 31, 2016, ending inventory. Required production for January and February of 2017 are 4,000 and 5,000 units, respectively. 2 pounds of raw materials are needed for each unit, and the estimated cost per pound is $6. Management desires an ending inventory equal to 25% of next month's materials requirements. Prepare the direct materials budget for January. (Round intermediate calculations and final answer to 0 decimal places, e.g. 5,275.) PERINE COMPANY Direct Materials Budget D:

Explanation / Answer

Solution :- Direct material budget (January month)

Raw material needed for production in January (4000 * 2)

Add :- Ending stock of Raw material (5000 * 25 %)

Less:- Beginning stock of Raw material (4000 * 25 %)

8000 Pounds

1250 Pounds

1000 Pounds

Particulars January month

Raw material needed for production in January (4000 * 2)

Add :- Ending stock of Raw material (5000 * 25 %)

Less:- Beginning stock of Raw material (4000 * 25 %)

8000 Pounds

1250 Pounds

1000 Pounds

Direct raw material to be purchased in January 8250 Pounds Cost of purchase of direct material in January (8250 * 6) $ 49500

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