Question
On March 31, Eagle Enterprises had an ending raw materials inventory of 3,800lbs. Production, in units, have been budgeted as follows for the next four
On March 31, Eagle Enterprises had an ending raw materials inventory of 3,800lbs. Production, in units, have been budgeted as follows for the next four months:
April 6,000
May 7,500
June 9,000
July 8,100
Eagles management has a policy that the raw materials inventory at the end of each month must contain 40% of the materials required for the following months budgeted production. Each unit requires 1.2lbs of raw material that costs $1.56 per lb.
Required:
Prepare Eagles direct materials budget including the dollar amount of purhcases for April, May and June and a total for the quarter.
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