Briel Exerdise 9-4 Porne Company has 2,000 pounds of raw mat orials n Rs Decembe

Question

Briel Exerdise 9-4 Porne Company has 2,000 pounds of raw mat orials n Rs December 31, 2016, endng niventory. Reqared peoduction or larusry and February of 2017 are 4,000 and 5,000 units, rspectively. 2 pounds of ram matenals are needed for each unt, and the estimated cost per pound is S6. Maagement desres an endng mentory ial to 25% nest month's matenals reanromerts prepare the dret materals butait lor anuary. (Iluumf intev mediate cakulations and final answer to O dedmaf itaree easin) Denct Haterials Budget

Explanation / Answer

Direct material budget :

Production units 4000 Raw material per unit 2 Raw material needed for production 8000 Add: Desired ending inventory (5000*2*25%) 2500 Total needs 10500 Less: Beginning inventory (2000) Raw material purchase 8500 Price per pound 6 Raw material purchase cost 51000

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