Budgeted balance sheet (or pro forma balance sheet) is used to assess the effect of planned decisions on the future financial position of the firm. EXERCISE 10-7. Direct Materials Purchases Budget. Roehler Industrial has estimated that production for the next five quarters will be: Production Information Ist quarter, 2017 45,000 units 2nd quarter, 2017 41,000 units 3rd quarter, 2017 49,000 units 4th quarter, 2017 38,000 units 1st quarter, 2018 47,000 units Finished units of production require 6 pounds of raw material per unit. The raw material cost is $7 per pound. There is $283,500 of raw material on hand at the beginning of the first quarter, 2017. Roehler desires to have 15 percent of next quarter's material requirements on hand at the end of each quarter. REQUIRED Prepare quarterly direct materials purchases budgets for Roehler Industrial for 2017. Answer: Roehler Industrial Direct Materials Purchases Budget For the Year Ending December 31, 2017 Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year Units to be produced Cost of raw material per unit (6 x $7) Cost of raw material needed for production Add desired ending inventory of raw materials Total material needed Less beginning inventory of raw material Required raw material purchases