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Rida, Inc., a manufacturer in a seasonal industry, is preparing its direct materials budget for the second quarter. It plans production of 229,000 units in the second quarter and 266,500 units in the third quarter. Raw material inventory is 56,500 pounds at the beginning of the second quarter. Other information follows:Direct materials Each unit requires e. 613 pounds of a key raw material, priced at $179 per pound. The company plans to end each quarter with an ending inventory of materials equal to 40% of next quarter's budgeted materials requirements. Required:Prepare a direct materials budget for the second quarter

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Answer and Explanation:

The Preparation of direct materials budget for the second quarter is prepared below:-

                                           Rida, Inc.,

                              Direct materials budget

                                for the second quarter

Particulars                                             Amount

Units to be produced                             229,000

Material required per unit                      0.6

Material needed for production           137,400

Budgeted Ending Inventory                   63,960

(266,500 units × 0.60 pounds × 40%)

Total material requirements                    201,360

(137,400 + 63,960]

Beginning Inventory                                 (56,500)

materials to be purchased                        144,860

(201,360 - 56,500)

material Price per pound                           $179

Budgeted Cost of Direct

material purchases                                  $25,929,940

(144,860 × $179)

Here we assume 0.60 pounds of a key raw material instead of 613 pounds.

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