Question

The following information is from the manufacturing budget and the budgeted financial statements of Fabor Fabrication.

  

Direct materials inventory, January 1	$	68,000
Direct materials inventory, December 31		57,000
Direct materials budgeted for use during the year		230,000
Accounts payable to suppliers of materials, January 1		50,000
Accounts payable to suppliers of materials, December 31		79,000

a. Compute the budgeted amount for purchases of direct materials during the year.

b. Compute the budgeted amount for cash payments during the year to suppliers of materials.

Answer 1

Answers

--Requirement A

Direct materials budgeted for use during the year	$230,000
Add: Direct material ending 31 Dec inventory balance	$57,000
Less: Direct material beginning Jan 1 inventory balance	$68,000
Budgeted amount for purchase of direct materials	$219,000

--Requirement B

Accounts Payable Beginning balance Jan 1	$50,000
Add: Budgeted amount of material to be purchased	$219,000
Less: Accounts payable ending balance Dec 31	$79,000
Budgeted amount for cash payments	$190,000