Preparing a Direct Materials Purchases Budget

Patrick Inc. makes industrial solvents sold in five-gallon drums. Planned production in units for the first three months of the coming year is:

January	40,000
February	55,000
March	60,000

Each drum requires 6 gallons of chemicals and one plastic drum. Company policy requires that ending inventories of raw materials for each month be 20% of the next month's production needs. That policy was met for the ending inventory of December in the prior year. The cost of one gallon of chemicals is $2.00. The cost of one drum is $1.60.

Required:

1. Calculate the ending inventory of chemicals in gallons for December of the prior year, and for January and February. What is the beginning inventory of chemicals for January? Round your answers to the nearest whole gallon.

Ending inventory for December	fill in the blank d7b78b01904bfc0_1 gallons
Ending inventory for January	fill in the blank d7b78b01904bfc0_2 gallons
Ending inventory for February	fill in the blank d7b78b01904bfc0_3 gallons
Beginning inventory for January	fill in the blank d7b78b01904bfc0_4 gallons

Feedback

1. See Cornerstone 9-3.

Learning Objective 2.

2. Prepare a direct materials purchases budget for chemicals for the months of January and February. Round Dollar purchases to the nearest dollar. Round all the other values to the nearest whole unit. Do not include a multiplication symbol as part of your answer.

Patrick Inc.
Direct Materials Purchases Budget - Chemicals in Gallons
For the Months of January and February
	January	February
Production in units	fill in the blank 00cc6f05f00aff7_1	fill in the blank 00cc6f05f00aff7_2
Gallons per unit	fill in the blank 00cc6f05f00aff7_3	fill in the blank 00cc6f05f00aff7_4
Gallons for production	fill in the blank 00cc6f05f00aff7_5	fill in the blank 00cc6f05f00aff7_6
Desired ending inventory	fill in the blank 00cc6f05f00aff7_7	fill in the blank 00cc6f05f00aff7_8
Needed	fill in the blank 00cc6f05f00aff7_9	fill in the blank 00cc6f05f00aff7_10
Less: Beginning inventory	fill in the blank 00cc6f05f00aff7_11	fill in the blank 00cc6f05f00aff7_12
Purchases	fill in the blank 00cc6f05f00aff7_13	fill in the blank 00cc6f05f00aff7_14
Price per gallon	$fill in the blank 00cc6f05f00aff7_15	$fill in the blank 00cc6f05f00aff7_16
Dollar purchases	$fill in the blank 00cc6f05f00aff7_17	$fill in the blank 00cc6f05f00aff7_18

Feedback

2. See Cornerstone 9-3.

Learning Objective 2.

3. Calculate the ending inventory of drums for December of the prior year, and for January and February. Round your answers to the nearest whole unit.

Ending inventory for December	fill in the blank f323bb073fdcfe4_1 units
Ending inventory for January	fill in the blank f323bb073fdcfe4_2 units
Ending inventory for February	fill in the blank f323bb073fdcfe4_3 units

Feedback

3. Multiply ending inventory percentage by next month's production and then by drums used per unit, one drum. Repeat for following months. Note ending inventory is beginning inventory for next month.

Learning Objective 2.

4. Prepare a direct materials purchases budget for drums for the months of January and February. Round Dollar purchases to the nearest dollar. Round all the other values to the nearest whole unit. Do not include a multiplication symbol as part of your answer.

Patrick Inc.
Direct Materials Purchases Budget - Drums
For the Months of January and February
	January	February
Production in units	fill in the blank 91e59e009f80ff0_1	fill in the blank 91e59e009f80ff0_2
Drums per unit	fill in the blank 91e59e009f80ff0_3	fill in the blank 91e59e009f80ff0_4
Drums for production	fill in the blank 91e59e009f80ff0_5	fill in the blank 91e59e009f80ff0_6
Desired ending inventory	fill in the blank 91e59e009f80ff0_7	fill in the blank 91e59e009f80ff0_8
Needed	fill in the blank 91e59e009f80ff0_9	fill in the blank 91e59e009f80ff0_10
Less: Beginning inventory	fill in the blank 91e59e009f80ff0_11	fill in the blank 91e59e009f80ff0_12
Purchases	fill in the blank 91e59e009f80ff0_13	fill in the blank 91e59e009f80ff0_14
Price per drum	$fill in the blank 91e59e009f80ff0_15	$fill in the blank 91e59e009f80ff0_16
Dollar purchases	$fill in the blank 91e59e009f80ff0_17	$fill in the blank 91e59e009f80ff0_18