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    Direct materials purchases budget by month for the first quarter.

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    E20-5 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.

    Complete the direct materials purchases budget by month for the first quarter.

    Direct Materials Purchases Budget
    For the Quarter Ending March 31, 2011

    January February March


    Total pounds needed for production


    Total materials required


    Direct materials purchases

    × $
    × $
    × $

    Total cost of direct materials purchases $

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    Solution Summary

    The direct materials purchase budgets by month for the first quarter are examined.