Question

Brief Exercise 22-04

Perine Company has 2,970 pounds of raw materials in its December 31, 2019, ending inventory. Required production for January and February of 2020 are 4,500 and 5,700 units, respectively. 3 pounds of raw materials are needed for each unit, and the estimated cost per pound is $8. Management desires an ending inventory equal to 22% of next month’s materials requirements.

Prepare the direct materials budget for January.

PERINE COMPANY Direct Materials Budget choose the accounting period January 31, 2020For the Month Ending January 31, 2020For the Quarter Ending January 31, 2020
select an opening direct materials budget item Total Cost of Direct Materials PurchasesUnits to be ProducedTotal Direct Labor CostTotal Required Direct Labor HoursDirect Materials Per UnitDirect Labor Time Per UnitBeginning Materials InventoryCost Per PoundTotal Materials RequiredDesired Ending InventoryTotal Pounds Required for ProductionDirect Labor Cost Per HourDirect Materials Purchases		enter a number of units
select an item Total Direct Labor CostDirect Materials PurchasesTotal Cost of Direct Materials PurchasesDesired Ending InventoryDirect Materials Per UnitUnits to be ProducedTotal Materials RequiredDirect Labor Cost Per HourTotal Pounds Required for ProductionTotal Required Direct Labor HoursBeginning Materials InventoryCost Per PoundDirect Labor Time Per Unit		enter the amount of pounds
select a summarizing line for the first part Beginning Materials InventoryDirect Materials PurchasesTotal Cost of Direct Materials PurchasesUnits to be ProducedTotal Pounds Required for ProductionDirect Materials Per UnitTotal Direct Labor CostDirect Labor Cost Per HourDirect Labor Time Per UnitDesired Ending InventoryTotal Materials RequiredTotal Required Direct Labor HoursCost Per Pound		enter a total amount of pounds for the first part
select between addition and deduction AddLess : select an item Direct Materials PurchasesTotal Materials RequiredTotal Cost of Direct Materials PurchasesDesired Ending InventoryTotal Required Direct Labor HoursUnits to be ProducedDirect Labor Cost Per HourTotal Pounds Required for ProductionDirect Labor Time Per UnitCost Per PoundDirect Materials Per UnitTotal Direct Labor CostBeginning Materials Inventory		enter the amount of pounds
select a summarizing line for the second part Total Pounds Required for ProductionUnits to be ProducedTotal Required Direct Labor HoursDirect Labor Time Per UnitTotal Materials RequiredCost Per PoundDirect Labor Cost Per HourBeginning Materials InventoryTotal Cost of Direct Materials PurchasesDirect Materials PurchasesDesired Ending InventoryDirect Materials Per UnitTotal Direct Labor Cost		enter a total amount of pounds for the second part
select between addition and deduction AddLess : select an item Total Direct Labor CostDirect Labor Cost Per HourTotal Pounds Required for ProductionDesired Ending InventoryTotal Cost of Direct Materials PurchasesTotal Materials RequiredTotal Required Direct Labor HoursDirect Labor Time Per UnitDirect Materials PurchasesCost Per PoundDirect Materials Per UnitUnits to be ProducedBeginning Materials Inventory		enter the amount of pounds
select a summarizing line for the third part Total Cost of Direct Materials PurchasesTotal Pounds Required for ProductionTotal Materials RequiredDirect Materials Per UnitTotal Direct Labor CostTotal Required Direct Labor HoursDirect Labor Cost Per HourDirect Materials PurchasesBeginning Materials InventoryUnits to be ProducedCost Per PoundDesired Ending InventoryDirect Labor Time Per Unit		enter a total amount of pounds for the third part
select an item Direct Materials Per UnitTotal Materials RequiredTotal Cost of Direct Materials PurchasesTotal Direct Labor CostBeginning Materials InventoryTotal Pounds Required for ProductionTotal Required Direct Labor HoursDirect Labor Time Per UnitUnits to be ProducedDirect Labor Cost Per HourCost Per PoundDesired Ending InventoryDirect Materials Purchases		$enter a dollar amount
select a closing direct materials budget item Direct Labor Cost Per HourDirect Materials Per UnitTotal Materials RequiredCost Per PoundDesired Ending InventoryTotal Cost of Direct Materials PurchasesDirect Labor Time Per UnitBeginning Materials InventoryDirect Materials PurchasesTotal Direct Labor CostTotal Pounds Required for ProductionTotal Required Direct Labor HoursUnits to be Produced		$enter a total dollar amount

Answer 1

Direct materials budget

	January
Units to be produced	4,500
Direct material pounds per unit	3
Total pounds needed for production	13,500
Add: Desired ending direct materials pounds	3,762
Total materials required	17,262
Less: Beginning direct materials pounds	- 2,970
Direct material purchases	14,292
Cost per pound	$8
Total cost of direct material purchases	$114,336

February production = 5,700 units

Direct material pounds per unit = 3

Total pounds needed for production in February = February production x Direct material pounds per unit

= 5,700 x 3

= 17,100

Desired ending direct materials pounds for January = 22% of Total pounds needed for production in February

= 17,100 x 22%

= 3,762