6.17 Direct materials budgeted payments LO2 New Ventures intends to start business on the first of January. Production plans for the first four months of operations are as follows. January 20 000 units February 50 000 units March 70 000 units April 70 000 units Each unit requires 2 kilograms of material. The entity would like to end each month with enough raw material inventory on hand to cover 25 per cent of the following months production needs. The material costs $7 per kilogram. The managers anticipate being able to pay for 40 per cent of purchases in the month of purchase. They will receive a 10 per cent discount for these early payments. They anticipate having to defer payment to the next month on 60 per cent of their purchases. No discount will be taken on these late payments. The business starts with no inventories on 1 January.

Q. Determine the budgeted payments for purchases of materials for each of the first three months of operations.