Question

Beridze manufacturing expects to produce​ 2,400 units in january and​ 3,700 units in february. beridze budgets​ $45 per unit for direct materials. the amount of indirect materials needed for production has been determined to be insignificant and will therefore not be considered in the calculation. the balance in the raw materials inventory account​ (all direct​ materials) on january 1 is​ $37,250. beridze desires the ending balance in raw materials inventory to be​ 70% of the next​ month's direct materials needed for production. desired ending balance for february is​ $51,800. what is the cost of budgeted purchases of direct materials needed for​ january?

Answer 1

The total cost of direct materials needed for the month of January will be$30,0000

Answer 2

We have that the january units cost 2400*45=108000$. Also, February's cost is going to be 3700*45=166500$. We have that for January, the ending balance needs to be 70% of the stock for February. Hence, it needs to be 70%*166500=116500$. Hence, we will need to pay for the units 108000$ and also 116500$; Thus, the total money that needs to be invested in January is 224500$. However, we already have 37250$, so the total inflow of money is 187250$. Hence, the correct choice is that on January we need 187300$.

(For February, we need to put in 166500$ and also 51800 need to be available at the end of the month. Thus, the total cost needs to be 218300$. However, 116500$ are already available from January. Hence, the total inflow for February is 101800$.
The total from both months is: 187250+101800=289050$)