Question

ZIRA CO.
Direct Materials Budget
For April, May, and June
	April	May	June
Budgeted production (units)	694	735	727	units
Materials requirements per unit	4	4	4	lbs.
Materials needed for production (lbs.)	2,776	2,940	2,908	lbs.
Budgeted ending inventory (lbs.)	882	872	872	lbs.
Total materials requirements (lbs.)	3,658	3,812	3,780	lbs.
Beginning inventory (lbs.)	833	882	872	lbs.
Materials to be purchased (lbs.)	2,825	2,930	2,908	lbs.
Cost per lb.	$4	$4	$4	per lb.
Total budgeted direct materials cost	$11,300	$11,720

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

	April		May		June		July
Production (units)	694		735		727		707

Each finished unit requires four 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 833 pounds. Assume direct materials cost $4 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

Direct materials budget
Material Purchase Budget		April	May	June
Material Usage		2776	2940	2908
Less Opening Stock		833	882	872.4
Add: Closing Stock		882	872.4	848.4
Material Purchase in	lbs	2825	2930	2884
Cost per lb.		4	4	4
Material Purchase in	$	11300	11721.6	11536
Working Note
		April	May	June	July
Production Units	Units	694	735	727	707
Materials requirements per unit		4	4	4	4
Material Usage Budget	lbs	2776	2940	2908	2828