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Preston, Inc., manufactures wooden shelving units for collecting and sorting mail. The company expects to produce 300 units in July and 360 units in August. Each unit requires 12 feet of wood at a cost of $1.30 per foot. Preston wants to always have 260 feet of wood on hand in materials inventory. Compute Preston's direct materials purchases budget for July and Augus

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Kolawole845

Answer:

Direct material purchase budget for July and August= $10634

Explanation:

The material purchases budget is determined by adding the the closing stock of materials to the material usage budget and subtracting the opening inventory of materials.

Material purchase budget= Material usage budget + closing inventory - opening inventory

Material budget=

                                               Unit

July  =           300×12       = 3600

August  =       360  ×   12 = 4320                

                                             7920

Closing inventory                 260

                                              8180

cost per unit                            × $1.30

                                          $10634

Direct material purchase budget for July and August= $10634

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