Sherman has budgeted sales for the upcoming quarter as follows: The desired ending finished goods inventory for each month is one-half of next month's budgeted sales. Three pounds of direct material are required for each unit produced. If direct material costs $5 per pound, and must be paid for in the month of purchase, the budgeted direct materials purchases (in dollars) for April are:

Question

Quizplus · Accepted Answer

To calculate the budgeted direct materials purchases for April, first determine the production needs for April. This includes April's sales and the desired ending inventory for April, minus the beginning inventory for April. Then, calculate the total pounds of direct material needed and multiply by the cost per pound.

Sherman Has Budgeted Sales for the Upcoming Quarter as Follows