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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
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. Required: Prepare a direct materials purchases budget for July, August, and September, showing purchases in units and in dollars for each month and in total. Langer Company Direct Materials Purchases Budget For July, August, and September July August September Total 3,500 4,100 4,900 12,800 Units to be produced Direct materials per unit (ounces) Production needs 15 15 15 15 52,500 66,000 73,500 192,000 Desired ending inventory (ounces) 19,800 22,050 28,350 28,350 Total needs 72,300 88,050 101,850 220,350 Less: Beginning inventory 15,750 19,800 22,050 15,750 Direct materials to be purchased (ounces) 55,200 67,500 77,700 200,400 Cost per ounce $0.08 $0.08 $0.08 $0.08 Total purchase cost 4,016 5,400 6,216 16,032
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