### Zortek Corporation: Direct Materials Budget for January**Background:**Zortek Corporation has planned for the production of 420 units in January and 350 units in February. Each finished unit requires six pounds of material Z, priced at $3 per pound. To ensure sufficient supply, each month’s ending inventory of material Z needs to be 30% of the subsequent month’s production needs. As of January 1, there are 1,050 pounds of material Z in inventory.**Objective:**Prepare a direct materials budget for January.**Direct Materials Budget Table:**| ZORTEK CORP.: Direct Materials Budget | January ||---------------------------------------|----------------|| **Units to produce** | ___ units || | ___ lbs. || **Materials needed for production (lbs.)** | ___ lbs. || | ___ lbs. || **Total materials requirements (lbs.)**| ___ lbs. || | ___ lbs. || **Materials to be purchased (lbs.)** | 0 lbs. || | ___ per lb. || **Cost of direct materials purchases**| |**Explanation:**- **Units to produce:** This reflects the total number of units to be manufactured in January.- **Materials needed for production:** Calculated as units to produce multiplied by the pounds of material required per unit.- **Total materials requirements:** Indicates the sum of materials needed for production and desired ending inventory.- **Materials to be purchased:** This value is derived from subtracting the beginning inventory from the total materials requirements.- **Cost of direct materials purchases:** Total estimated cost based on material to be purchased and cost per pound.The data in this budget will help Zortek Corporation ensure they have sufficient material Z for production while managing inventory efficiently.

Desired ending inventory for January = 350*6*30% = 630 lbs.Direct Material Budget January Units to produce 420 units x Material needed per unit 6 lbs. Material needed for production 2520 lbs. Add: desired ending inventory 630 lbs. Total materials requirements 3150 lbs. Less: Beginning inventory (2520*30%) 756 lbs. Materials to be purchased 2394 lbs. Material Cost per pound $3 per lb. Cost of direct materials purchases $7182

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Zortek Corporation budgets production of 420 units in January and 350 units in February. Each finished unit requires six pounds of material Z, which costs $3 per pound. Each month's ending inventory of material Z should be 30% of the following month's budgeted production. The January 1 inventory has 1,050 pounds of material Z. Prepare a direct materials budget for January. ZORTEK CORP. Direct Materials Budget January Units to produce units Ibs. Materials needed for production (Ibs.) Ibs. Ibs. Total materials requirements (Ibs.) Ibs. Ibs. Materials to be purchased (Ibs.) O Ibs. per Ib. Cost of direct materials purchases

Zortek Corporation budgets production of 420 units in January and 350 units in February. Each finished unit requires six pounds of material Z, which costs $3 per pound. Each month's ending inventory of material Z should be 30% of the following month's budgeted production. The January 1 inventory has 1,050 pounds of material Z. Prepare a direct materials budget for January. ZORTEK CORP. Direct Materials Budget January Units to produce units Ibs. Materials needed for production (Ibs.) Ibs. Ibs. Total materials requirements (Ibs.) Ibs. Ibs. Materials to be purchased (Ibs.) O Ibs. per Ib. Cost of direct materials purchases

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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