Perine Company has 2,000 pounds of raw materials in its December 31, 2016, endin

Question

Perine Company has 2,000 pounds of raw materials in its December 31, 2016, ending inventory, Required production for January and February of 2017 are 4,000 and 5,000 units, respectively. 2 pounds of raw materials are needed for each unit, and the estimated cost per pound is $6. Management desires an ending inventory equal to 25% of next month's materials requiremen 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 Budget For the Month Ending January 31, 2017 Units to be produced 4000 Direct Materials needed per unit 2 Total pounds needed for production 8000 Add: Desired ending direct materials (pounds) 2500 Total materials required 10500 Less: Beginning direct material 2000 Direct Materials purchased 8500 Cost per pound 6 Total cost of direct materials purchases 51000

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