Question

Zira Co. reports the following production budget for the next four months.

	April		May		June		July
Production (units)	594		635		627		607

Each finished unit requires five pounds of raw materials and the company wants to end each month with raw materials inventory equal to 30% of next month’s production needs. Beginning raw materials inventory for April was 891 pounds. Assume direct materials cost $3 per pound.

Prepare a direct materials budget for April, May, and June. (Round your intermediate calculations and final answers to the nearest whole dollar amount.)

Answer 1

Answer:

Preparation of a direct materials budget for April, May, and June:

Particulars	April	May	June
Raw material required for production	2,970 Pounds	3,175 Pounds	3135 pounds
Less: Beginning raw material inventory	(891 pounds)	(953 pounds)	(941 pounds)
Add: Ending raw material inventory	953 pounds	941 pounds	911 pounds
Raw materials to be purchased	3032 pounds	3,163 pounds	3,105 pounds
Purchase price of raw material@3 per pound	$9,096	$9,489	$9,315