Yasmin expects to produce 2 comma 000 units in January and 2 comma 180 units in February. The company budgets 5 pounds per unit of direct materials at a cost of $ 50 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 400 pounds. Yasmin desires the ending balance in Raw Materials Inventory to be 40% of the next month's direct materials needed for production. Desired ending balance for February is 4 comma 800 pounds. Prepare Yasmin's direct materials budget for January and February.

                                 Yasmin Inc.

                       Direct Materials Budget

  For the Months of January and February, Year 202x

                                                         January             February

Units to be produced                        2,000                2,800

Direct materials per unit                           5                        5  

Direct materials need for prod.       10,000               14,000

Desired ending inventory                 5,600                 4,800

Beginning inventory                        (5,400)               (5,600)  

Direct material purchases               10,200                13,200

Cost per pound                                    $50                     $50  

Cost of direct materials              $510,000           $660,000

Explanation:

month               expected production

January                      2,000

February                    2,800

5 pounds per unit at $50 per pound

beginning raw materials inventory 5,400 pounds

desired ending raw materials inventory 4,800 pounds

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