Preparing a Direct Materials Purchases Budget

Patrick Inc. makes industrial solvents sold in five-gallon drums. Planned production in units for the first three months of the coming year is:

January 40,000
February 55,000
March 60,000
Each drum requires 6 gallons of chemicals and one plastic drum. Company policy requires that ending inventories of raw materials for each month be 20% of the next month's production needs. That policy was met for the ending inventory of December in the prior year. The cost of one gallon of chemicals is $2.00. The cost of one drum is $1.60.

Required:

1. Calculate the ending inventory of chemicals in gallons for December of the prior year, and for January and February. What is the beginning inventory of chemicals for January? Round your answers to the nearest whole gallon.

Ending inventory for December gallons
Ending inventory for January gallons
Ending inventory for February gallons
Beginning inventory for January gallons
2. Prepare a direct materials purchases budget for chemicals for the months of January and February. Round Dollar purchases to the nearest dollar. Round all the other values to the nearest whole unit. Do not include a multiplication symbol as part of your answer.

Patrick Inc.

Direct Materials Purchases Budget - Chemicals in Gallons

For the Months of January and February

January

February

Production in units

Gallons per unit

Gallons for production

Desired ending inventory

Needed

Less: Beginning inventory

Purchases

Price per gallon

$
$
Dollar purchases

$
$
3. Calculate the ending inventory of drums for December of the prior year, and for January and February. Round your answers to the nearest whole unit.

Ending inventory for December units
Ending inventory for January units
Ending inventory for February units
4. Prepare a direct materials purchases budget for drums for the months of January and February. Round Dollar purchases to the nearest dollar. Round all the other values to the nearest whole unit. Do not include a multiplication symbol as part of your answer.

Patrick Inc.

Direct Materials Purchases Budget - Drums

For the Months of January and February

January

February

Production in units

Drums per unit

Drums for production

Desired ending inventory

Needed

Less: Beginning inventory

Purchases

Price per drum

$
$
Dollar purchases

$
$