Yada expects to produce 1,650 units in January and 2,190 units in February. The

Question

Yada expects to produce 1,650 units in January and 2,190 units in February. The company budgets 2 pounds per unit of direct materials at a cost of S20 per pound. Indirect materials are insignificant and not considered for budgeting purposes. The balance in the Ra Materials Inventory account all direct materials on January 1 is 5 000 pounds. Yada desires the ending balance i Raw Material Inventory to be 80% of the next month's direct materials needed or production. Desired ending balance for February is 4,400 pounds. Prepare Yada's direct materials budget for January and February. Begin by preparing the direct materials budget for January and February through total direct materials needed line and then complete the budget by calculating the budgeted cost of direct materials purchases. Yada Company Direct Materials Budget Two Months Ended January 31 and February 28 January February Budgeted units to be produced Direct materials (pounds) per unit Direct materials needed for production Plus: Desired direct materials in ending inventory (pounds) Total direct materials needed '

Explanation / Answer

January February Budgeted units to be produced 1650 2190 Direct materials per unit 2 2 Direct materials needed for production 3300 4380 Plus: Desired direct materials in ending inventory 3504 4400 Total direct materials needed 6804 8780 Less: Direct materials in beginning inventory 5000 3504 Budgeted purchases of direct materials 1804 5276 Cost per pound 20 20 Budgeted cost of direct materials purchases 36080 105520

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