Preparing a Direct Materials Purchases Budget

Tulum Inc. makes a Mexican chocolate mix sold in 4-pound boxes. Planned production in units for the first 3 months of the coming year is:

January	24,700
February	22,000
March	30,200

Each box requires 4.2 pounds of chocolate mix and one box. Company policy requires that ending inventories of raw materials for each month be 10% of the next months production needs. That policy was met for the ending inventory of December in the prior year. The cost of 1 pound of chocolate mix is $1.50. The cost of one box is $0.10.

Required:

1. Calculate the ending inventory of chocolate mix in pounds for December of the prior year and for January and February. What is the beginning inventory of chocolate mix for January?

Ending inventory for December	pounds
Ending inventory for January	pounds
Ending inventory for February	pounds
Beginning inventory for January	pounds

2. Prepare a direct materials purchases budget for chocolate mix for the months of January and February.

Tulum Inc.
Direct Materials Purchases Budget - Chocolate mix in Pounds:
For the Months of January and February
	January	February
Production in units
Pounds per unit
Pounds for production
Desired ending inventory
Needed
Less: Beginning inventory
Purchases
Price per pounds	$	$
Dollar purchases	$	$

3. Calculate the ending inventory of boxes for December of the prior year and for January and February. Round your answers to the nearest whole unit.

Ending inventory for December	units
Ending inventory for January	units
Ending inventory for February	units

4. Prepare a direct materials purchases budget for boxes for the months of January and February.

Tulum Inc.
Direct Materials Purchases Budget - Boxes
For the Months of January and February
	January	February
Production in units
Boxes per unit
Boxes for production
Desired ending inventory
Needed
Less: Beginning inventory
Purchases
Price per box	$	$
Dollar purchases	$	$