The company pays $2 for each computer chip. Policy states that the ending inventory of computer chips should be at least 25% of the following months production needs.

The data for the first four months of the year:

Requirement: prepare a direct materials budget for the first quarter that shows both the number of computers chips neeed and the dollar amount of the purchases in the budget. Prepare the direct material budget by first calculating the toal quantity needed then complete the budget.

January. February March . April Stuffed animals to be produced 5,600 4,800 4,200 4,000 Sacco Industries Direct Materials Budget For the Months of January through March anuaryFebruary March Quarter 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 Less: Beginning inventory of direct materials Quantity to purchase Multiply by. Cost per unit Total cost of direct material purchases