QS 22-7 Manufacturing: Direct materials budget LO P1 Zortek Corp. budgets produc

Question

QS 22-7 Manufacturing: Direct materials budget LO P1 Zortek Corp. budgets production of 350 units in January and 220 units in February. Each finished unit requires six pounds of raw material z, which costs $4 per pound. Each month's ending inventory of raw materials should be 50% of the following month's budgeted production. The January 1 raw materials inventory has 180 pounds of Z. Prepare a direct materials budget for January. ZORTEK CORP Direct Materials Budget For Month Ended January 31 Budget production (units) Materials needed for production (lbs.) Total materials requirements (bs.) Materials to be purchased (Ibs.) units lbs. lbs. lbs. lbs. lbs. lbs. per lb Total cost of direct materials purchases

Explanation / Answer

ZORTEK CORP.

Direct Materials Budget

For Month Ended January 31

Budget production (units) 350 units Materials requirements per unit 6 lbs. Materials needed for production (lbs.) 2,100 lbs. Add: Budgeted ending inventory (lbs.)(220 units × 6 lbs. per unit × 50%) 660 lbs. Total materials requirements (lbs.) 2,760 lbs. Less: Beginning inventory (lbs.) (180) lbs. Materials to be purchased (lbs.) 2,580 lbs. Materials price per pound $4 lbs. Total cost of direct materials purchases $10,320 per lb.

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