Preparing a Direct Materials Purchases Budget

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Preparing a Direct Materials Purchases Budget
Patrick Inc. makes industrial solvents sold in 5-gallon drums. Planned production in units for the first 3 months of the coming year is:
DATA
January 42,400
February 40,400
March 49,500
Direct materials needed per unit:
Chemicals (in gallons) 5.5
Plastic drums 1
Direct materials cost:
Chemicals (per gallon) $1.90
Plastic drums (per unit) $1.50
Ending inventory requirements 25% of next month’s production needs of raw materials
That ending inventory policy was met for the ending inventory of December in the prior year.
REQUIRED:
Calculate the ending inventory of chemicals in gallons for December of the prior year and for January and February. What is the beginning inventory of chemicals for January?
Using formulas and cell references from the problem data, perform the required analysis.
Formulas entered in the green cells show in the orange cells. Transfer amounts to CNOWv2 for grading.
      Formulas
Ending inventory in gallons for December      
Ending inventory in gallons for January      
Ending inventory in gallons for February      
Beginning inventory in gallons for January      
REQUIRED:
Prepare a direct materials purchases budget for chemicals for the months of January and February.
Patrick Inc.
Direct Materials Purchases Budget – Chemicals in Gallons
For the Months of January and February
  January February
Production in units
Gallons per unit
Gallons for production
Desired ending inventory
Needed
Less: Beginning inventory
Purchases
Price per gallon
Dollar purchases
  Formulas
  January February
     
     
     
     
     
     
     
     
     
REQUIRED:
Calculate the ending inventory of drums for December of the prior year and for January and February.
      Formulas
Ending inventory in drums for December      
Ending inventory in drums for January      
Ending inventory in drums for February      
REQUIRED:
Prepare a direct materials purchases budget for drums for the months of January and February.
Patrick Inc.
Direct Materials Purchases Budget – Drums
For the Months of January and February
  January February
Production in units
Drums per unit
Drums for production
Desired ending inventory
Needed
Less: Beginning inventory
Purchases
Price per drum
Dollar purchases
  Formulas
  January February
     
     
     
     
   
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