Cornerstone Exercise $9-4$ Preparing a Direct Materials Purchases Budget

Selva Inc. makes keyboards for tablets, and packages them in crates containing $50$ keyboards per

crate. Planned production in units for the first three months of the coming year is:

Each keyboard requires two litres of chemicals and one plastic crate. Company policy requires

that ending inventories of raw materials for each month be $15$ percent of the next month's produc$-$

tion needs. That policy was met for the ending inventory of December in the prior year. The cost

of one litre of chemicals is $$0\mathrm{.}50.$ The cost of one crate is $$1\mathrm{.}60.($Note: Round all dollar amounts

to the nearest dollar.$)$

Required:

Calculate the ending inventory of chemicals in litres for December of the prior year, and for

January and February. What is the beginning inventory of chemicals for January?

Prepare a direct materials purchases budget for chemicals for the months of January and

February.

Calculate the ending inventory of crates for December of the prior year, and for January

and February. What is the beginning inventory of crates for January?

Prepare a direct materials purchases budget for crates for the months of January and

February.