Petro Company has 2,016 pounds of raw materials in its December 31, 2029, ending inventory. Required production for January and February of 2030 is 4,200 and 5,800 units, respectively. 2 pounds of raw materials are needed for each unit, and the estimated cost per pound is $8. Management desires an ending inventory equal to 24% of next month's materials requirements.

Hint: Beginning inventory in one period is the ending inventory in the prior period. Especially for January's beginning inventory, apply 24% of January's materials requirements to find out the ending inventory in the prior month, which will become the beginning inventory in January.

Direct Materials Budget

Petro Company Direct Materials Budget For the Month Ended January 31, 2030

units to be produced
direct materials (pounds) per unit
total pounds required for production
add: desired ending inventory
total materials required
less: beginning materials inventory
direct materials purchase
cost per pound
Total cost of direct materials purchases