Question

Inc., a manufacturer in a seasonal industry, is preparing its direct materials budget for the second quarter. It plans production of 240,000 units in the second quarter and 52,500 units in the third quarter. Raw material inventory is 43,200 pounds at the beginning of the second quarter. Other information follows. Prepare a direct materials budget for the second quarter.

Short answer

The budgeted cost of direct materials will be $19,293,750.

Step-by-step solution

Introduction

Direct materials are those raw materials used in an organization directly related to manufacturing and production.

Preparation of a direct materials budget

Rida Inc
Direct materials budget
For the second quarter
Particulars	Amount
Units to be produced	240,000 units
Multiply: Materials requirement	0.60 pounds
Materials needed	144,000 pounds
Add: Ending inventory	9,450 pounds
Total inventory required	153,450 pounds
Less: Beginning inventory	43,200 pounds
Materials to be purchased	110,250 pounds
Multiply: Materials price	$175
Budgeted direct materials	$19,293,750