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26 March, 19:39

Zortek Corp. budgets production of 470 units in January and 210 units in February. Each finished unit requires six pounds of raw material Z, which costs $2 per pound. Each month's ending inventory of raw materials should be 30% of the following month's budgeted production. The January 1 raw materials inventory has 120 pounds of Z. Prepare a direct materials budget for January.

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  1. 26 March, 19:55
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    Preparation of the direct material budget is presented below:

    Explanation:

    Zortek Corp.

    Direct Materials Budget

    For Month Ended January 31

    Budget production in units 470 units

    Price of material per pound $2 per pound

    Materials needed for production $940

    Add: Budgeted ending inventory (210 units * $2 per pound * 30%) 126 units

    Total sum of materials requirements 1,066 units

    Less: Beginning inventory 120 pounds

    Materials purchased 946 pounds

    Price of material per pound $2 per pound

    Total cost of direct materials purchases $1,892
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