**Direct Materials Purchases Budget Calculation for Preston, Inc.****Background:**Preston, Inc. manufactures wooden shelving units used for collecting and sorting mail. Production forecasts estimate 340 units for July and 420 units for August. Each shelving unit requires 12 feet of wood. The cost of wood is $1.10 per foot. To ensure smooth operations, Preston aims to maintain an inventory of 280 feet of wood at all times.**Objective:**Calculate the direct materials purchases budget for both July and August.**Data Table:**- The table shows the months of July and August with corresponding spaces to input the budgeted direct materials purchases in terms of expenses or quantity.To complete the computation:1. Calculate the total wood needed for production for each month.2. Account for the desired closing inventory.3. Subtract the opening inventory to find the amount of wood to be purchased.4. Calculate the total cost by multiplying the feet of wood to be purchased by the cost per foot ($1.10).This budget helps in planning financial and material resources efficiently.

The budgeting is very important part of costing. There are various types of budgets which are required to be prepared like: * Direct material purchase budget * sales budget * purchase budget * labour budget The question deals with direct material purchase budget. In the give question, expected sales are given and direct material required per unit is give. We will calculate total material required for the sales target and required closing stock. From this we can calculate expected direct material purchase. Please refer below image for the solution:

Answered: on hand in materials inventory. Compute…

Business

Accounting

on hand in materials inventory. Compute Preston's direct materials purchases budget for July and August. Budgeted direct materials purchases July August

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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