Perine Company has 3,784 pounds of raw materials in its December 31, 2016, endin

Question

Perine Company has 3,784 pounds of raw materials in its December 31, 2016, ending inventory. Required production for January and February of 2017 are 4,300 and 6,050 units, respectively. 4 pounds of raw materials are needed for each unit, and the estimated cost per pound is $7. Management desires an ending inventory equal to 22% of next month’s materials requirements.

Brief Exercise 23-4 Perine Company has 3,784 pounds of raw materials in its December 31, 2016, ending inventory. Required production for January and February of 2017 are 4,300 and 6,050 units, respectively. 4 pounds of raw materials are needed for each unit, and the estimated cost per pound is $7. Management desires an ending inventory equal to 22% of next month's materials requirements. Prepare the direct materials budget for January. (Round intermediate calculations and final answer to O decimal places, e.g. 5,275.) PERINE COMPANY Direct Materials Budget

Explanation / Answer

Direct material purchase budget :

Production in january 4300 Raw material per unit 4 Raw material used from production 17200 Add: Desired ending inventory (6050*4*22%) 5324 Total 22524 Less: Beginning inventory -3784 Raw material purchase 18740 Raw material per pound 7 Raw material purchase cost 131180

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