E9-5 Moreno Industries Has Adopted the Following Production Budget for the First 4 Months

E9-5 Moreno Industries has adopted the following production budget for the first 4 months of 2009. Month Units Month Units January 10,000 March 5,000 February 8,000 April 4,000 Each unit requires 3 pounds of raw materials costing $2 per pound. On December 31, 2008, the ending raw materials inventory was 9,000 pounds. Management wants to have a raw materials inventory at the end of the month equal to 30% of next month's production requirements. Prepare a direct materials purchases budget by month for the first quarter. MORENO INDUSTRIES Direct Materials Purchases Budget For the Quarter Ending March 31, 2009 January February March × × × Total pounds needed for production Add: Total materials required Less: Direct materials purchases × $ × $ × $ Total cost of direct materials purchases $ $ $

MORENO INDUSTRIES

Direct Materials Purchases Budget

For the Quarter Ending March 31, 2009

January / February / March
Units to be produced
Direct materials per unit
Total pounds needed for production
Add: Desired ending direct materials
(pounds)*
Total materials required
Less: Beginning direct materials
(pounds)
Direct materials purchases
Cost per pound
Total cost of direct materials
purchases / 10,000
X 3
30,000
7,200
37,200
9,000
28,200
X $2
$56,400 / 8,000
X 3
24,000
4,500
28,500
7,200
21,300
X $2
$42,600 / 5,000
X 3
15,000
3,600
18,600
4,500
14,100
X $2
$28,200

*30% of next month’s production needs.