Question
NancyDaniel, Waterway & Paul Fabricators' purchasing manager, has just received the company's production budget for the first quarter. January February March Quarter Budgeted unit sales
NancyDaniel, Waterway & Paul Fabricators' purchasing manager, has just received the company's production budget for the first quarter.
January
February
March
Quarter
Budgeted unit sales
21,000
28,000
33,000
82,000
+ Budgeted ending inventory
5,600
6,600
6,800
6,800
Total units required
26,600
34,600
39,800
88,800
- Beginning inventory
3,200
5,600
6,600
3,200
Budgeted production
23,400
29,000
33,200
85,600
Budgeted sales for April is 34,000 units and for May is 26,000 units.
Each brick requires 6 pounds of clay, and Nancy expects to pay $1.50 per pound of clay in the coming year. Company policy requires an ending direct materials inventory each month that will meet 10% of the following month's production needs. Company policy requires an ending finished goods inventory each month that will meet 20% of the following month's sales volume. Nancy expects to have 15,000 pounds of clay at a cost of $22,500 in inventory at the beginning of the year.
Prepare Waterway & Paul's direct materials purchases budget for the first quarter. (Enter price per pound to 2 decimal places, e.g. 52.75.)
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