Exercise 9-20 Direct Materials Purchases Budget

Tsiklauri Company produces plastic items, including plastic housing for humidifiers. Each housing

requires 425 grams of plastic costing $0.34 per 10 grams. Tsiklauri moulds the plastic into the proper

shape. Tsiklauri has budgeted production of the humidifiers for the next four months as follows:

Units

March 3,500

April 4,400

May 4,900

June 6,300

Inventory policy requires that sufficient plastic be in ending monthly inventory to satisfy 20 percent

of the following month's production needs. The inventory of plastic at the beginning of

March equals exactly the amount needed to satisfy the inventory policy.

Required:

Prepare a direct materials purchases budget for March, April, and May, showing purchases in

units and in dollars for each month and in total.