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Cornerstone Exercise 9 - 4 Preparing a Direct Materials Purchases Budget Selva Inc. makes keyboards for tablets, and packages them in crates containing 5 0

Cornerstone Exercise 9-4 Preparing a Direct Materials Purchases Budget
Selva Inc. makes keyboards for tablets, and packages them in crates containing 50 keyboards per
crate. Planned production in units for the first three months of the coming year is:
Each keyboard requires two litres of chemicals and one plastic crate. Company policy requires
that ending inventories of raw materials for each month be 15 percent of the next month's produc-
tion needs. That policy was met for the ending inventory of December in the prior year. The cost
of one litre of chemicals is $0.50. The cost of one crate is $1.60.(Note: Round all dollar amounts
to the nearest dollar.)
Required:
Calculate the ending inventory of chemicals in litres for December of the prior year, and for
January and February. What is the beginning inventory of chemicals for January?
Prepare a direct materials purchases budget for chemicals for the months of January and
February.
Calculate the ending inventory of crates for December of the prior year, and for January
and February. What is the beginning inventory of crates for January?
Prepare a direct materials purchases budget for crates for the months of January and
February.
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