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The company produces two different products: Product A and Product B. Direct materials inventory and...

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Accounting

The company produces two different products: Product A and Product B. Direct materials inventory and finished goods inventory are costed using the first-in, first-out (FIFO) method.

There are two types of Direct Material: Material A and Material B.

The following data are available for the 2020 budget:

Direct materials:

Material A 7 BD per kg

Material B 10 BD per kg

Direct manufacturing labor 20 BD per hour.

Content of Each Product Unit

Product A Product B

Material A 12 kg 12 kg

Material B 6 kg 8 kg

Direct manufacturing labor 4 hours 6 hours

Products

Product A Product B

Expected sales in units 50,000 10,000

Selling price 600 BD 800 BD

Target ending inventory in units 11,000 500

Beginning inventory in units 1,000 500

Beginning inventory in dollars 384,000 BD 262,000 BD

Direct Materials

Material A Material B

Beginning Inventory 70,000 kg 60,000 kg

Target ending inventory 80,000 kg 20,000 kg

Required: What would be the purchases budget in units and Dinars for the raw material for this company? Show the calculations.

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