Stuffed animals to be produced

January. . . . .

5,900

February. . . .

4,500

March. . . . . .

4,600

April. . . . . . .

4,700

McKnight Industries manufactures a popular interactive stuffed animal for children that requires two computer chips inside each toy. The company pays $3 for each computer chip. To help to guard against stockouts of the computer chip, McKnight Industries has a policy that states that the ending inventory of computer chips should be at least 20% of the following month's production needs. The production schedule for the first four months of the year is as follows: (Click the icon to view the production schedule.) Requirement Prepare a direct materials budget for the first quarter that shows both the number of computer chips needed and the dollar amount of the purchases in the budget. Prepare the direct materials budget by first calculating the total quantity needed, then complete the budget. McKnight Industries Direct Materials Budget For the Months of January through March Units to be produced Multiply by: Quantity of direct materials needed per unit Quantity needed for production Plus: Desired ending inventory of direct materials Total quantity needed January February March Quarter