Moreno Industries has adopted the following production budget for the first 4 months of 2011.
|
Month |
Units |
Month |
Units |
|
January |
10,000 |
March |
5,000 |
|
February |
8,000 |
April |
4,000 |
Each unit requires 3 pounds of raw materials costing $2 per pound. On December 31, 2010, the ending raw materials inventory was 9,000 pounds. Management wants to have a raw materials inventory at the end of the month equal to 30% of next month’s production requirements.
Instructions
Prepare a direct materials purchases budget by month for the first quarter.