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24 June, 21:21

Yogi expects to produce 1 comma 700 units in January and 2 comma 180 units in February. The company budgets 3 pounds per unit of direct materials at a cost of $ 15 per pound. Indirect materials are insignificant and not considered for budgeting purposes. The balance in the Raw Materials Inventory account (all direct materials) on January 1 is 5 comma 200 pounds. Yogi desires the ending balance in Raw Materials Inventory to be 60 % of the next month's direct materials needed for production. Desired ending balance for February is 4 comma 300 pounds. Prepare Yogi 's direct materials budget for January and February.

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  1. 24 June, 21:31
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    Answer and Explanation:

    The Preparation of Yogi 's direct materials budget for January and February is shown below:-

    Direct material budget

    Two months ended Jan 31 and Feb 28

    January February

    Budgeted units to be produced a 1,700 2,180

    Direct material pounds per unit b 3 3

    Direct materials needed for

    production (c = a * b) 5,100 6,540

    Add: Desired direct material

    in ending inventory (pounds) d 3,060 4,300

    (5,100 * 0.6)

    Total direct materials needed 8,160 10,840

    (e = c + d)

    Less: Direct material beginning in

    inventory (pounds) f 5,200 3,060

    Budgeted purchase of direct

    material g = e - f 2,960 7,780

    Direct material cost per pound h $15 $15

    Budgeted cost of direct material

    purchases i = g * h $44,400 $116,700
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