Question
Three ounces of a liquid are required for each unit produced by Blake's Corporation. The cost of the liquid is $6 per ounce. Budgeted production
Three ounces of a liquid are required for each unit produced by Blake's Corporation. The cost of the liquid is $6 per ounce. Budgeted production of units is given below for the fourth quarter and the first month of the following quarter.
October 14,000
November 12,000
December 18,000
January 10,000
To prevent against stock outs of the liquid, the company maintains an ending inventory each month equal to 10% of the next month's production needs. The beginning inventory of the fabric in October will be 3,100 ounces.
Required: Prepare a direct materials budget for the liquid, by month and in total for the fourth quarter. Be sure to include both the quantity to be purchased and its cost for each month.
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