HELPPPPPP!!!!! Norton Manufacturing expects to prudce 2,400 units in Jan and 3,4

Question

HELPPPPPP!!!!!

Norton Manufacturing expects to prudce 2,400 units in Jan and 3,400 units in Feb. Norton budgets $18 per unit for Direct Materials. Indirect materials are insignificant and not considered for budgeting purposes. The balance in the Raw Materials Inventory account (all direct materials) on Jan 1 is $38,650. Norton desires the ending balance in Raw Materials Inventory to be 15% of the next month's direct materials needed for production. Desired ending balance for Feb is $40,000. What is the cost of budgeted purchases of direct materials needed for Jan?

Explanation / Answer

Calulation of Budgeted purchase of direct material needed for Janualry Particulars Amount ($) Direct material needed for January Production Units (2400 units * $ 18 per unit) 43200 Add:Closing Rawmaterial ( 15% of February production needed) 9180 (3400 units * $ 18 per unit * 15/100) Less: Direct material Inventory on January ,1 38650 Budgeted purchase of direct material needed for Janualry 13730

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