Assume that each thermos requires 3 ounces of direct material which costs $.50 per ounce. In addition, management desires to have an ending inventory of direct material equal to 20% of next month's raw material needs on hand at the end of each month. The company expects to have 5,040 ounces on hand at the beginning of July.
Prepare a direct material purchases budget for the third quarter which shows both the quantity of material that will need to be purchased as well as the cost.