Cleary Manufacturing produces self-watering planters for use in upscale retail establishments. Sales projections for the first five months of the upcoming year show the estimated unit sales of the planters each month to be as follows:
Inventory at the start of the year was 900 planters. The desired inventory of planters at the end of each month should be equal to 25% of the following month's budgeted sales. Each planter requires three pounds of polypropylene (a type of plastic). The company wants to have 20% of the polypropylene required for next month's production on hand at the end of each month. The polypropylene costs $0.10 per pound.
Start by preparing the direct materials budget through the total quantity needed, then complete the budget.
Cleary Manufacturing
Direct Materials Budget
For the Months of January through March
January February March Quarter
Units to be produced 3,550 3,350 3,600 10,500
Multiply by: Quantity of direct materials needed per unit 3 3 3 3
Quantity needed for production 10,650 10,050 10,800 31,500
Plus: Desired ending inventory of direct materials 2,010 2,160 2,760 2,760
Total quantity needed 12,660 12,210 13,560 34,260
Less: Beginning inventory of direct materials
Quantity to purchase
Multiply by: Cost per pound
Total cost of direct material purchases
Data Table
Number of planters to be sold
January ...... 3,600
February ..... 3,400
March ........ 3,200
April ........ 4,800
May .......... 4,000