Paseo Industries has adopted the following production budget for the first 4 months of 2013.

Month Units Month Units

January 10,620 March 4,840

February 8,460 April 3,760

Each unit requires 5 pounds of raw materials costing $2 per pound. On December 31, 2012, the ending raw materials inventory was 9,370 pounds. Management wants to have a raw materials inventory at the end of the month equal to 30% of the month equal to 30% of next months production requirements.

Prepare a direct materials purchases budget by month for the first quarter.

PASEO INDUSTRIES Direct Materials Purchases Budget For the Quarter Ending March 31, 2013

January February March

Units to be Produced 10620 8460 4840

Direct Materials Per Unit 5 5 5

Total Pounds Needed 4 Production 53100 42300 24200

+ Desired Ending Materials (LBS)

Total Materials Required

- Beginning Direct Materials (LBS)

Direct Materials Purchased

Costs per LBS

Total Cost of Direct Materials