Question

Yogi expects to produce 1 comma 700 units in January and 2 comma 180 units in February . The company budgets 3 pounds per unit of direct materials at a cost of $ 15 per pound. Indirect materials are insignificant and not considered for budgeting purposes. The balance in the Raw Materials Inventory account​ (all direct​ materials) on January 1 is 5 comma 200 pounds. Yogi desires the ending balance in Raw Materials Inventory to be 60 ​% of the next​ month's direct materials needed for production. Desired ending balance for February is 4 comma 300 pounds. Prepare Yogi ​'s direct materials budget for January and February .

Answer 1

Answer and Explanation:

The Preparation of Yogi ​'s direct materials budget for January and February is shown below:-

                                 Direct material budget

                    Two months ended Jan 31 and Feb 28

                                                          January   February

Budgeted units to be produced a     1,700        2,180

Direct material pounds per unit b          3               3

Direct materials needed for

production (c = a × b)                           5,100       6,540

Add: Desired direct material

in ending inventory (pounds) d           3,060      4,300  

                                                     (5,100 × 0.6)

Total direct materials needed             8,160      10,840

(e = c + d)

Less: Direct material beginning in

inventory(pounds) f                               5,200     3,060

Budgeted purchase of direct  

material g = e - f                                     2,960     7,780

Direct material cost per pound h             $15         $15

Budgeted cost of direct material

purchases i = g × h                               $44,400  $116,700