Problem # 1

Three yards of a fabric are required for each dress produced by the Gauci, Inc. The cost of the fabric is $9 per yard. Below you will find the budgeted production of the dresses in the second quarter: April May June July Required production dresses 21,000 26,000 22,000 25,000 To prevent the company from running out of fabric, they try and maintain an ending inventory of fabric each month equal to 20% of the next month's budgeted production. The beginning inventory of the fabric in April will be 12,600

Instructions:

Prepare a direct materials budget for the second quarter. Also, include both the quantity to be purchased and its cost for those three months.