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Direct Materials Purchases Budget Langer Company produces plastic items, including plastic housings for humidifiers. Each housing requires about 15 ounces of plastic costing $0.08 per
Direct Materials Purchases Budget Langer Company produces plastic items, including plastic housings for humidifiers. Each housing requires about 15 ounces of plastic costing $0.08 per ounce. Langer molds the plastic into the proper shape. Langer has budgeted production of the housings for the next 4 months as follows: Units July 3,500 August 4,400 September 4,900 October 6,300 Inventory policy requires that sufficient plastic be in ending monthly inventory to satisfy 20% of the following month's production needs. The inventory of plastic at the beginning of July equals exactly the amount needed to satisfy the inventory policy. Prepare a direct materials purchases budget for July, August, and September, showing purchases in units and in dollars for eac month and in total. Langer Company Direct Materials Purchases Budget For July, August, and September July August Total September 4,900 Units to be produced 3,500 4,400 12,800 Direct materials per unit (ounces) 15 15 Production needs 52,500 66,000 73,500 192,000 Desired ending inventory (ounces) 13,200 14,700 18,900 Total needs 65,700 80,700 92,400 Less: Beginning inventory 10,500 13,200 14,700 Direct materials to be purchased (ounces) 55,200 67,500 77,700 Cost per ounce $0.08 $0.08 4,416 $0.08 5,400 $0.08 6,216 Total purchase cost $ $ $
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