Question - Marcy Jones, Bates & Hill Fabricators' purchasing manager, has just received the company's production budget for the first quarter.
|
January
|
February
|
March
|
Quarter
|
|
Budgeted Production
|
11,257
|
22,727
|
20,225
|
54,209
|
Aaron Bates, the company's vice president of marketing and has prepared the following sales forecast for the first six months of the coming year.
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January
|
February
|
March
|
April
|
May
|
June
|
|
11,800
|
23,010
|
20,650
|
17,110
|
13,570
|
12,800
|
Company policy requires an ending finished goods inventory each month that will meet 12% of the following month's sales volume.
Each brick requires 3 pounds of clay, and Marcy expects to pay $0.24 per pound of clay in the coming year. Company policy requires an ending direct materials inventory each month that will meet 6% of the following month's production needs. Marcy expects to have 11,151 pounds of clay at a cost of $4,460 in inventory at the beginning of the year.
Prepare Bates & Hill's direct materials purchases budget for the first quarter.