Qs 20-7 Manufecturing: Direct materials budget LO P Zortek Corp. budgets product

Question

Qs 20-7 Manufecturing: Direct materials budget LO P Zortek Corp. budgets production of 410 units in January and 280 units in February. Each finished unit requires four pounds of raw material Z, which costs $4 per pound. Each month's ending inventory of raw materials should be 30% of the following month's budgeted production. The Januery 1 raw materials inventory hes 180 pounds of Z. Prepare a direct materials budget for January Direct Materials Budget units lbs. lbs. lbs. bs. lbs. Budget production (units) Materials needed for production (Ibs.) Total materials requirements (ibs.) Materials to be purchased (lbs.) Total cost of direct materials purchases per b

Explanation / Answer

ZORTEK CORP.

Direct Materials Budget

For Month Ended January 31

Budget production (units) 410 units Materials requirements per unit 4 lbs. Materials needed for production (lbs.) 1,640 lbs. Add: Budgeted ending inventory (lbs.)(280 units × 4 lbs. per unit × 30%) 336 lbs. Total materials requirements (lbs.) 1,976 lbs. Less: Beginning inventory (lbs.) (180) lbs. Materials to be purchased (lbs.) 1,796 lbs. Materials price per pound 4 per lb. Total cost of direct materials purchases 7,184

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