Production Budget
	Q1	Q2	Q3	Q4	Total
Sales in Units	1,000	1,200	1,500	2,000	5,700
Add: Desired Ending Inv.	240	300	400	400	400
Total Needs	1,240	1,500	1,900	2,400	6,100
Less:Beginning Inv.	180	240	300	400	180
Units to be produced	1,060	1,260	1,600	2,000	5,92

The Direct Materials Budget tells management how much must be bought to support production and the cost of those purchases.

Plain t-shirts cost $3.00 each, and ink (for the screen printing) cost $0.20 per ounce. The factory needs one plain t-shirt and five ounces of ink for each logoed t-shirt that it produces. Texas Rexs policy is to have 10% of the following quarters needs in ending inventory. The factory has 58 plain t-shirts and 390 ounces of ink on hand on January 1. At the end of the year, the desired ending inventory is 106 plain t-shirts and 530 ounces of ink.

Texas Rex, Inc.

Direct Materials Budget

For the year ending December 31, 2018

Plain t-shirts: Q1 Q2 Q3 Q4 Total

Units to be Produced

Direct Materials per unit_______ _______ ________ _______ ________

Production Needs

Desired Ending Inv. _______ _______ ________ _______ ________

Total Needs

Less Beginning Inv. _______ _______ ________ _______ ________

Direct Materials

To be Purchased

Cost per t-shirt _______ _______ ________ _______ ________

Total T-shirt Purchase

Cost

Ink: Q1 Q2 Q3 Q4 Total

Units to be Produced

Direct Materials per unit_______ _______ ________ _______ ________

Production Needs

Desired Ending Inv. _______ _______ ________ _______ ________

Total Needs

Less Beginning Inv. _______ _______ ________ _______ ________

Direct Materials

To be Purchased

Cost per ounce _______ _______ ________ _______ ________

Total Ink Purchase Cost

Total Cost of

All Direct Materials

The Direct Labor Budget shows how many hours are required for production and the total cost of those hours. It takes 0.12 hours to produce one t-shirt. The average wage cost per hour is $10.