Dewitt industries has adopted the following production budget for the first 4 months of 2020. month units month units january 10,170 march 5,190 february 8,470 april 4,310 each unit requires 5 pounds of raw materials costing $3 per pound. on december 31, 2019, the ending raw materials inventory was 10,170 pounds. management wants to have a raw materials inventory at the end of the month equal to 20% of next month’s production requirements. prepare a direct materials purchases budget by month for the first quarter.

Instructions are listed below.

Explanation:

Giving the following information:

January 10,170

March 5,190

February 8,470

April 4,310

Each unit requires 5 pounds of raw materials costing $3 per pound. On December 31, 2019, the ending raw materials inventory was 10,170 pounds. Management wants to have a raw materials inventory at the end of the month equal to 20% of next month’s production requirements.

Direct material budget:

January= (10,170*5)= 50,850 pounds

Febraury= (8,470*5)= 42,350

March= (5,190*5)= 25,950

Ending inventory desired= (4,310*5*0.2)= 4,310

Beginning inventory= ( 10,170)

Total= 113,290 pounds

Total cost= 113,290*3= $339,870

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