Question

Sherman has budgeted sales for the upcoming quarter as follows:

	April	May	June
Units	1,600	1,900	1,750

The desired ending finished goods inventory for each month is one-half of next month's budgeted sales. Three pounds of direct material are required for each unit produced. If direct material costs $5 per pound, and must be paid for in the month of purchase, the budgeted direct materials purchases (in dollars) for April are:

Group of answer choices

$38,250.

$40,500.

$26,250.

$17,500.

Answer 1

The budgeted direct materials purchases (in dollars) for April are:

$26,250

Working :

	April
Sales	1600
Add: Ending Inventory (1900*1/2)	950
Less: Beginning Inventory (1600*1/2)	800
Units Required	1750
Direct Material required per unit	3
Total Direct Material Required	5250
Cost per pound	$                     5.00
Total Direct Material Purchase cost	$           26,250.00