Direct Materials Budget The MSC Company has anticipated its unit sales for the first half of...

 

Transcribed Image Text:

Direct Materials Budget The MSC Company has anticipated its unit sales for the first half of 2022 as follows: 2022 Units January 12,000 February 14,000 March 15,000 16,000 17,000 18,000 April May June Each unit requires 2 pounds of raw materials that are estimated to cost an average of $4 per pound. It is the company's policy to maintain a finished goods inventory at the end of each month equal to 10% of next month's anticipated sales. The company also has a policy of maintaining a raw materials inventory at the end of each month equal to 20% of the pounds needed for the following month's production. At the end of December 31, 2021, there were 4,040 pounds of raw materials on hand. REQUIRED: Prepare a direct materials budget for the first three months of 2022, using the following format: The MSC Company Direct Materials Budget For the First Three Months of 2022 January February Units to be produced X Direct materials (DM) per unit = Total pounds needed for production Plus: Desired ending DM (pounds) Total materials (pounds) needed Less: Beginning DM (pounds) DM (pounds) to purchase X Cost per pound = Total cost of DM (pounds) to purchase March Direct Materials Budget The MSC Company has anticipated its unit sales for the first half of 2022 as follows: 2022 Units January 12,000 February 14,000 March 15,000 16,000 17,000 18,000 April May June Each unit requires 2 pounds of raw materials that are estimated to cost an average of $4 per pound. It is the company's policy to maintain a finished goods inventory at the end of each month equal to 10% of next month's anticipated sales. The company also has a policy of maintaining a raw materials inventory at the end of each month equal to 20% of the pounds needed for the following month's production. At the end of December 31, 2021, there were 4,040 pounds of raw materials on hand. REQUIRED: Prepare a direct materials budget for the first three months of 2022, using the following format: The MSC Company Direct Materials Budget For the First Three Months of 2022 January February Units to be produced X Direct materials (DM) per unit = Total pounds needed for production Plus: Desired ending DM (pounds) Total materials (pounds) needed Less: Beginning DM (pounds) DM (pounds) to purchase X Cost per pound = Total cost of DM (pounds) to purchase March

Answer rating: 100% (QA)

January Units to be produced 12000 Direct materials DM per unit 2 pounds Total pounds needed for pro... View the full answer