DeWitt Industries has adopted the following production budget for the first 4 months of 2022.

Each unit requires 2 pounds of raw materials costing $3 per pound. On December 31, 2021, the ending raw materials inventory was 4,000 pounds. Management wants to have a raw materials inventory at the end of the month equal to 20% of next month’s production requirements.

Instructions

Prepare a direct materials purchases budget by month for the first quarter.

Prepare production and direct materials budgets by quarters for 6 months.

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Month Units Month Units January 10,000 March 5,000 February 8,000 April 4,000