Two pounds of raw materials are needed to produce one product. The desired ending balance of raw materials is 10% of the of the next month's production needs. (Refer to your answer in Activity Sheet 05). The beginning inventory of raw materials is 4,000 pounds and raw material cost per unit is P 0.50/per pound.

Purchases= production + desired ending inventory - beginning inventory

Step-by-step explanation:

Giving the following information:

Two pounds of raw materials are needed to produce one product.

The desired ending balance of raw materials is 10% of the next month's production needs.

The beginning inventory of raw materials is 4,000 pounds.

The raw material cost per unit is $0.50 per pound.

To calculate the direct material purchase required for a given month, we need the production for each month. I will provide the formula and a small example to guide an answer.

To calculate the purchase required, we need to use the following formula:

Purchases= production + desired ending inventory - beginning inventory

For example:

Production:

January= 5,000 units

February= 4,500 units

Direct material purchases January:

Production= 5,000*2= 10,000

Desired ending inventory= (4,500*2)*0.1= 900

Beginning inventory= (4,000)

Total purchase in pounds= 6,900

Total direct material cost= 6,900*0.5= $3,450

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step-by-step explanation: