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	gallons
Ending inventory for January	gallons
Ending inventory for February	gallons
Beginning inventory for January	gallons

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
Gallons per unit
Gallons for production
Desired ending inventory
Needed
Less: Beginning inventory
Purchases
Price per gallon		$		$
Dollar purchases		$		$

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	units
Ending inventory for January	units
Ending inventory for February	units

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
Drums per unit
Drums for production
Desired ending inventory
Needed
Less: Beginning inventory
Purchases
Price per drum		$		$
Dollar purchases		$		$