Question

Bell expects to produce 1 comma 800 units in January and 2 comma 155 units in February. The company budgets 3 pounds per unit of direct materials at a cost of $ 10 per pound. Indirect materials are insignificant and not considered for budgeting purposes. The balance in the Raw Materials Inventory account​ (all direct​ materials) on January 1 is 4 comma 950 pounds. Bell desires the ending balance in Raw Materials Inventory to be 20​% of the next​ month's direct materials needed for production. Desired ending balance for February is 4 comma 860 pounds. Prepare Bell​'s direct materials budget for January and February.

Answer 1

To prepare Bell's direct materials budget for January and February, we need to calculate the desired ending balance in Raw Materials Inventory based on the next month's direct materials needed for production.

Step-by-step explanation:

To prepare Bell's direct materials budget for January and February, we need to consider the desired ending balance in Raw Materials Inventory. According to the information provided, Bell desires the ending balance in Raw Materials Inventory to be 20% of the next month's direct materials needed for production.

In January, Bell plans to produce 1,800 units, so the next month's direct materials needed for production would be calculated as follows: 1,800 units x 3 pounds per unit = 5,400 pounds. Therefore, the desired ending balance for January would be 20% of 5,400 pounds, which is 1,080 pounds.

In February, Bell plans to produce 2,155 units. The next month's direct materials needed for production would be 2,155 units x 3 pounds per unit = 6,465 pounds. Therefore, the desired ending balance for February would be 4,860 pounds (as given in the question).

Answer 2

Instructions are below.

Step-by-step explanation:

Giving the following information:

Production:

January= 1,800 units

February= 2,155 units

The company budgets 3 pounds per unit of direct materials at a cost of $ 10 per pound.

Beginning inventory= 4,950 pounds.

Desired ending inventory= 20​% of the next​ month's direct materials needed for production.

Desired ending balance for February is 4,860 pounds.

To calculate purchases, we need to use the following formula:

Purchases= production + desired ending inventory - beginning inventory

January (in pounds):

Production= 1,800*3= 5,400

Desired ending inventory= (2,155*3)*0.2= 1,293

Beginning inventory= (4,950)

Total= 1,743

Total cost= 1,743*10= $17,430

February (in pounds):

Production= 2,155*3= 6,465

Desired ending inventory= 4,860

Beginning inventory= (1,293)

Total= 10,032

Total cost= 10,032*10= $100,320