Short Question
Q. Prepare a Direct Material Purchase Budget with the following information.
• Plastic is the only direct material used in Framecraft’s picture frames.
• Each picture frame required 8 ounces of plastic.
• Framecraft’s Purchasing Department has estimated the cost of the plastic used in the picture frames at $ 0.06 per ounce.
• Assume that each quarter’s desired units of ending direct materials inventory become the next quarter’s desired units of beginning direct materials inventory.
• Framecraft’s desired level of ending direct materials inventory is 10 percent of the next quarter’s budgeted production unit.
• Beginning inventory of direct materials for the first quarter is 12000 whereas the ending direct material inventory for the fourth quarter is 20000.
Sample Solution