A company manufactures a popular interactive stuffed animal for children that requires two computer chips inside each toy. The company pays $ 1 for each computer chip. To help to guard against stockouts of the computer chip, This company has a policy that states that the ending inventory of computer chips should be at least 25% of the following month's production needs. The production schedule for the first four months of the year is as follows:

Stuffed Animals Produced

January....5400

February..4200

March......4700

April........4500

Prepare a direct materials budget for the first quarter that shows both the number of computer chips needed and the dollar amount of the purchases in the budget.

	January	February	March	Quarter
Units to be proudced
Multiply by: Quantity of direct materials needed per unit
Quantity needed for production
Plus: Desired ending inventory of direct materials
Total quantity needed
Less: Beginning inventory of direct materials
Quantity to purchase
Multiply by: Cost per unit
Total cost of direct material purchases