Preparing a Direct Materials Purchases Budget Tulum Inc. makes a Mexican chocolate mix sold in 4-pound boxes. Planned production in units for the first 3 months of the coming year is: January 24,700 February 22,000 March 30,200 Each box requires 4.2 pounds of chocolate mix and one box. Company policy requires that ending inventories of raw materials for each month be 10% of the next month's production needs. That policy was met for the ending inventory of December in the prior year. The cost of 1 pound of chocolate mix is $1.50. The cost of one box is $0.10. 4. Prepare a direct materials purchases budget for boxes for the months of January and February. Tulum Inc. Direct Materials Purchases Budget - Boxes For the Months of January and February January February Production in units 103,740 x 92,400 Boxes per unit 0.24 0.24 Boxes for production 24,700 22,000 Desired ending inventory 2,200 3,020 Needed 26,900 25,020 Less: Beginning inventory 2,470 2,200 Purchases 24,430 22,820 $ 0.1 ~ $ Price per box 0.1 Dollar purchases 2,443 2,282