• Preparing a direct materials budget o Each unit requires 3 lbs. of DM o DM costs $0.60 per lb. o Miles will begin the year with 20,000 lbs. of DM, but 30,000 lbs. at the end of January, 35,000 at the end of February, and 40,000 lbs. at the end of March o Formulas: I (DM/unit x Units) + Desired EI = DM Needed DM Needed - Estimated BI = DM to Purchase DM to Purchase x Cost/Unit = Total DM Cost Miles Manufacturing Direct Materials Budget For the quarter ending March 31, 20XX February January March
• Preparing a direct materials budget o Each unit requires 3 lbs. of DM o DM costs $0.60 per lb. o Miles will begin the year with 20,000 lbs. of DM, but 30,000 lbs. at the end of January, 35,000 at the end of February, and 40,000 lbs. at the end of March o Formulas: I (DM/unit x Units) + Desired EI = DM Needed DM Needed - Estimated BI = DM to Purchase DM to Purchase x Cost/Unit = Total DM Cost Miles Manufacturing Direct Materials Budget For the quarter ending March 31, 20XX February January March
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:• Preparing a direct materials budget
o Each unit requires 3 lbs. of DM
o DM costs $0.60 per lb.
o Miles will begin the year with 20,000 lbs. of DM, but 30,000 lbs. at
the end of January, 35,000 at the end of February, and 40,000 lbs.
at the end of March
o Formulas:
I
(DM/unit x Units) + Desired EI = DM Needed
DM Needed - Estimated BI = DM to Purchase
DM to Purchase x Cost/Unit = Total DM Cost
Miles Manufacturing
Direct Materials Budget
For the quarter ending March 31, 20XX
February
January
March
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