A company manufactures widgets. Based on an analysis, we find that each widget needs 3/4 pound of gunk. The following is information on the budgeted production of widgets in units for the following three months:

July August September

Budgeted production 21,000 20,000 24,000

We know that this company desires to maintain monthly ending inventories of gunk amounting to 25% of the following month's budgeted production needs. The cost per pound of gunk is $2.12.

Instructions

Prepare a direct materials purchases budget for the month of August.