Chapter 9, Problem 9.5E

DeWitt Industries has adopted the following production budget for the first 4 months of 2017.

Month		Units
January		10,000
February		8,000
Month	Units
March	5,000
April	4,000

Each unit requires 2 pounds of raw materials costing $3 per pound. On December 31, 2016, the ending raw materials inventory was 4,000 pounds. Management wants to have a raw materials inventory at the end of the month equal to 20% of next month’s production requirements.

Instructions

Prepare a direct materials purchases budget by month for the first quarter.