Question

Direct Materials Purchases Budget Langer Company produces plastic items, including plastic housings for humidifiers. Each housing requires about 15 ounces of plastic costing $0.08 per ounce. Langer molds the plastic into the proper shape. Langer has budgeted production of the housings for the next 4 months as follows:

Units
July 3,500
August 4,400
September 4,900
October 6,300
Prepare a direct materials purchases budget for July, August, and September, showing purchases in units and in dollars for each month and in total.

Answer 1

Total cost for the period= $15,360

Step-by-step explanation:

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

Purchases= production + desired ending inventory - beginning inventory

July (ounces):

Production= 3,500*15= 52,500

Desired ending inventory= 0

Beginning inventory= 0

Total= 52,500

Total cost= 52,500*0.08= $4,200

August (ounces):

Production= 4,400*15= 66,000

Desired ending inventory= 0

Beginning inventory= 0

Total= 66,000

Total cost= 66,000*0.08= $5,280

September (ounces):

Production= 4,900*15= 73,500

Desired ending inventory= 0

Beginning inventory= 0

Total= 73,500

Total cost= 73,500*0.08= $5,880

Total cost for the period= $15,360