Smoke, Inc. makes and sells buckets. Each bucket uses 1/2 pound of plastic. Budgeted production of buckets in units for the next three months is as follows: April May June Budgeted production 21,000 22,000 24,000 The company wants to maintain monthly ending inventories of plastic equal to 25% of the following month's budgeted production needs. The cost of plastic is $2.20 per pound. Instructions Prepare a direct materials purchases budget for the month of May.

Total purchase= $24,750

Explanation:

Giving the following information:

Each bucket uses 1/2 pound of plastic.

Production:

May= 22,000

June= 24,000

The company wants to maintain monthly ending inventories of plastic equal to 25% of the following month's budgeted production needs.

The cost of plastic is $2.20 per pound.

Direct material budget:

Sales for May= (22,000*0.5 pound* $2.2)= $24,200

Ending inventory= (24,000*0.5 pound* $2.2)*0.25= 6,600

Beginning inventory= (24,200*0.25)= (6,050)

Total= $24,750

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