3) Please prepare the Direct Materials budget for July-Septemberbased on the following information.
Required production:
July 60,000
August 90,000
September 150,000
October 100,000
3 chips are needed per calculator
Desired ending inventory is 20% of the following month’s production needs
Each chip cost $2
Ending inventory for June is 36,000
Direct Materials budget
| July | August | September | |
| Production in units | 60,000 | 90,000 | 150,000 |
| Direct materials per unit | 3 | 3 | 3 |
| Materials required for production | 180,000 | 270,000 | 450,000 |
| Ending raw materials | 54,000 (270,000*20%) | 90,000 (450,000*20%) | 60,000 (100,000*3*20%) |
| Raw material needs | 234,000 | 360,000 | 510,000 |
| Beginning raw materials | (36,000) | (54,000) | (90,000) |
| Raw material purchases | 198,000 | 306,000 | 420,000 |
| Raw materials cost per unit | $2 | $2 | $2 |
| Raw materials cost | $396,000 | $612,000 | $840,000 |
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