Question

4. Complete the following direct material budget for 1Q to 4Q. DM budget 1Q 2Q 3Q 4Q 1Q Production in unit 60 90 150 100 80 DM per unit in gram [5 gram/unit] 5 grams 5 grams                                                DM for production Desired DM EI [20% is the target %] LESS DM BI DM to be purchased unit cost of DM [$3/gram]                                   cost of DM purchased

Answer 1

Requirement: Prepare the direct material budget as follows

Particulars	Quarter 1	Quarter 2	Quarter 3	Quarter 4	Quarter 1
Production in units	60	90	150	100	80
× Direct material required per unit in grams	5	5	5	5	5
Total direct material required for production in grams	300	450	750	500	400
Add: Desired ending balance in grams	90	150	100	80	0
Deduct: Beginning inventory in grams	-60	-90	-150	-100
Direct material to be purchased in grams	330	510	700	480
× Cost per one gram of direct material	3	3	3	3
Cost of direct material purchased	$990	$1,530	$2,100	$1,440

Note: The ending balance of direct material is calculated at rate of 20% of the following months requirement as follows   

Quarter 1 80 60 90 А Particulars Quarter 1 Quarter 2 Quarter 3 Quarter 4 2 Production in units 150 100 3 x Direct material required per unit in grams 15 4 Total direct material required for production =B2*B3 =C2*C3 =D2 D3 =E2 E3 5 Add: Desired ending balance =C4%20% =D4*20% =E4*20% =F4*20% 6 Deduct: Beginning inventory =-B4*20% =-B5 =-C5 =-D5 7 Direct material to be purchased I=SUM(B4:B6) 1=SUM(C4:06) =SUM(D4:D6) =SUM(E4:56) 8 * Cost per one gram of direct material 9 Cost of direct material purchased =B7*B8 =C7*CS =D7*DS =E7*ES =F2*F3 =G4*20%