LO.3 & LO.4 (Direct material purdtases and budgeted payments) Campbell Manufacturing intends to start business on January I,20I4. Production plans for the first four months of operations are as follows:

January 20,000 units

February 50,000 units

March 70,000 units

'Apr 70,000 units

Each unit requires two por:nds of material. The firm would like to end each month with enogh raw matiral to cover 25 percent of the following month's production needs.

Raw material costs $7 per pound. Management pays for 40 percent of purchases in the month of purchase and receives a I0 percent discount for these payments.

The remaining purchases are paid in the following month, with no discount available .

a. Prepare a purchases budget for the fint quarter of 2014 in units, in total, and in dollars.

b. Determine the budgeted payments for purchases of raw material for each of the fint three monfhs of operations and for the quarter in totd.

c. Where in the budgeted financial satements do the purchase discounts appear?