Direct Materials Budgeting Shaver Bicycle Shop assembles and sells tricycles and bicycles. The frames are purchased from one supplier and the wheels from another. The following materials are required:

Management anticipates that 150 bicycles and 160 tricycles will be assembled during the first quarter of 2009. On December 31, 2008, the following assembly parts are on hand:

Management also decides that, beginning in January, the inventory of parts on hand at the end of each month should be sufficient to make 10 bicycles and 10 tricycles.
Prepare a budget for direct materials purchases for the first quarter of 2009. (Note:
You are not required to extend the budget to determine the budget for cash payments to suppliers.)

Transcribed Image Text:

Bicycles One 22-inch frame, $35 Two 22-inch wheels, $10 each Tricycles One 12-inch frame, $15 Two 4-inch wheels, $10 each One 12-inch wheel, $7.50