Ask Question
30 August, 04:55

Perine Company has 5,460 pounds of raw materials in its December 31, 2019, ending inventory. Required production for January and February of 2020 are 4,200 and 6,000 units, respectively. 5 pounds of raw materials are needed for each unit, and the estimated cost per pound is $6. Management desires an ending inventory equal to 26% of next month's materials requirements.

Prepare the direct materials budget for January.

+5
Answers (1)
  1. 30 August, 05:00
    0
    Instructions are below.

    Explanation:

    Giving the following information:

    Beginning inventory = 5,460 pounds of raw materials

    Production:

    January = 4,200 units

    February = 6,000 units

    5 pounds of raw materials are needed for each unit, and the estimated cost per pound is $6.

    Management desires an ending inventory equal to 26% of next month's materials requirements.

    Direct material budget = production + desired ending inventory - beginning inventory

    Direct material budget (in pounds):

    Production = 4,200*5 = 21,000

    Desired ending inventory = (6,000*5) * 0.26 = 7,800

    Beginning inventory = (5,460)

    Total = 23,340

    Total cost = 23,340*6 = $140,040
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Perine Company has 5,460 pounds of raw materials in its December 31, 2019, ending inventory. Required production for January and February ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers