Direct Materials Purchases Budget Langer Company produces plastic items, including plastic housings for humidifiers. Each housing requires about 21 ounces of plastic costing $0.1 per ounce. Langer molds the plastic into the proper shape. Langer has budgeted production of the housings for the next 4 months as follows: Units July 3,500 August 4,400 September 4,900 October 6,300 Inventory policy requires that sufficient plastic be in ending monthly inventory to satisfy 30% of the following month's production needs. The inventory of plastic at the beginning of July equals exactly the amount needed to satisfy the inventory policy. Required: Prepare a direct materials purchases budget for July, August, and September, showing purchases in units and in dollars for each month and in total. If required, round the total purchase cost to nearest whole value.
Direct Materials Purchases Budget Langer Company produces plastic items, including plastic housings for humidifiers. Each housing requires about 21 ounces of plastic costing $0.1 per ounce. Langer molds the plastic into the proper shape. Langer has budgeted production of the housings for the next 4 months as follows: Units July 3,500 August 4,400 September 4,900 October 6,300 Inventory policy requires that sufficient plastic be in ending monthly inventory to satisfy 30% of the following month's production needs. The inventory of plastic at the beginning of July equals exactly the amount needed to satisfy the inventory policy. Required: Prepare a direct materials purchases budget for July, August, and September, showing purchases in units and in dollars for each month and in total. If required, round the total purchase cost to nearest whole value.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Direct Materials Purchases Budget
Langer Company produces plastic items, including plastic housings for humidifiers. Each housing requires about 21 ounces of plastic costing $0.1 per ounce. Langer molds the plastic into the proper shape. Langer has budgeted production of the housings for the next 4 months as follows:
| Units | |
| July | 3,500 |
| August | 4,400 |
| September | 4,900 |
| October | 6,300 |
Inventory policy requires that sufficient plastic be in ending monthly inventory to satisfy 30% of the following month's production needs. The inventory of plastic at the beginning of July equals exactly the amount needed to satisfy the inventory policy.
Required:
Prepare a direct materials purchases budget for July, August, and September, showing purchases in units and in dollars for each month and in total. If required, round the total purchase cost to nearest whole value.
Transcribed Image Text:Langer Company
Direct Materials Purchases Budget
For July, August and September
July
August September
Total
Units to be produced
Direct materials per unit (ounces)
Production needs
Desired ending inventory (ounces)
Total needs
Less: Beginning inventory
Direct materials to be purchased (ounces)
Cost per ounce
$0.1
$0.1
$0.1
$0.1
Total purchase cost
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