Marcy Jones, Bates & Hill Fabricators' purchasing manager, has just received the company's production budget for the first quarter (see Exercise 5-11). Each brick requires 5 pounds of clay, and Marcy expects to pay $0.40 per pound of clay in the coming year. Company policy requires an ending direct materials inventory each month that will meet 10% of the following month's production needs. Marcy expects to have 18,900 pounds of clay at a cost of $7,560 in inventory at the beginning of the year.
Prepare Bates & Hill's direct materials purchases budget for the first quarter.