Question

Can someone help me solve this?

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

Inventory policy requires that sufficient plastic be in ending monthly inventory to satisfy 30% of the following month's production needs. The inventory of plastic at the beginning of July equals exactly the amount needed to satisfy the inventory policy.

Required:

Prepare a direct materials purchases budget for July, August, and September, showing purchases in units and in dollars for each month and in total. If required, round the total purchase cost to nearest whole value.

Langer Company
Direct Materials Purchases Budget
For July, August and September
	July	August	September	Total
Units to be produced
Direct materials per unit (ounces)
Production needs
Desired ending inventory (ounces)
Total needs
Less: Beginning inventory
Direct materials to be purchased (ounces)
Cost per ounce	$0.08	$0.08	$0.08	$0.08
Total purchase cost	$	$	$	$

Answer 1

Answer

• Requirement

	Langer Company
	Direct Materials Purchases Budget
	For July, August and September
		July	August	September	Total
A	Units to be produced	3,500	4,400	4,900	12,800
B	Direct materials per unit (ounces)	15	15	15	15
C = A x B	Production needs	52,500	66,000	73,500	192,000
D = 30% of next month's 'C'	Desired ending inventory (ounces)	19,800	22,050	28,350 [6300 x 15 x 30%]	28,350
E = C+D	Total needs	72,300	88,050	101,850	220,350
F	Less: Beginning inventory	15,750 [52500 x 30%]	19,800	22,050	15,750
G = E - F	Direct materials to be purchased (ounces)	56,550	68,250	79,800	204,600
H	Cost per ounce	$0.08	$0.08	$0.08	$0.08
I = G x H	Total purchase cost	$4,524	$5,460	$6,384	$16,368