question archive Preparing a Direct Materials Purchases Budget Tulum Inc

Preparing a Direct Materials Purchases Budget Tulum Inc

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Preparing a Direct Materials Purchases Budget

Tulum Inc. makes a Mexican chocolate mix sold in 4-pound boxes. Planned production in units for the first 3 months of the coming year is:

January 24,700
February 22,000
March 30,200

Each box requires 4.2 pounds of chocolate mix and one box. Company policy requires that ending inventories of raw materials for each month be 10% of the next month’s production needs. That policy was met for the ending inventory of December in the prior year. The cost of 1 pound of chocolate mix is $1.50. The cost of one box is $0.10.

Required:

1. Calculate the ending inventory of chocolate mix in pounds for December of the prior year and for January and February. What is the beginning inventory of chocolate mix for January?

Ending inventory for December pounds
Ending inventory for January pounds
Ending inventory for February pounds
Beginning inventory for January pounds

2. Prepare a direct materials purchases budget for chocolate mix for the months of January and February.

Tulum Inc.
Direct Materials Purchases Budget - Chocolate mix in Pounds:
For the Months of January and February
  January February
Production in units    
Pounds per unit    
Pounds for production    
Desired ending inventory    
Needed    
Less: Beginning inventory    
Purchases    
Price per pounds $ $
Dollar purchases $ $

3. Calculate the ending inventory of boxes for December of the prior year and for January and February. Round your answers to the nearest whole unit.

Ending inventory for December units
Ending inventory for January units
Ending inventory for February units

4. Prepare a direct materials purchases budget for boxes for the months of January and February.

Tulum Inc.
Direct Materials Purchases Budget - Boxes
For the Months of January and February
  January February
Production in units    
Boxes per unit    
Boxes for production    
Desired ending inventory    
Needed    
Less: Beginning inventory    
Purchases    
Price per box $ $
Dollar purchases $ $

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