Direct Material usage and Purchase Budget

Problem
A manufacturing compay provides you the following information
Particulars Product A Product B
Material X @ Rs. 3 per unit 2 units 4 units
Material Y @ Rs. 1 per unit 1 unit 2units
Units to be produced as per production budget 10,000 4,000

Inventory of Raw material :

Particulars Material X Material Y
Opening stock as on 01.01.2014 12,000 units 2,000 units
estimated closing stock as on 31.12.2014 16,000 units 4,000 units

prepare the Direct Material usage and purchase Budget for the year 2014

final product = Product A and Product B

input material = material X and material Y

Solution
Direct material usage and Purchase budget for the year 2014
Particulars Material X Material Y
A. Budgeted Usage ( for Production)
For Product A 10,000 units *2 = 20,000 units 10,000 units * 1 = 10,000 units
For Product B 4,000 units * 4 = 16,000 units 4,000 units * 2 = 8,000 units
36,000 units 18,000 units
Add: Closing stock 16,000 units 4,000 units
52,000 units 22,000 units
Less: Opening stock 12,000 units 2,000 units
Budgeted purchase (in units) 40,000 units 20,000 units
Rate per unit Rs. 3 Rs. 1
Budgeted purchase (in cost)
budgeted purchase in units * Rate per unit 40,000 units * Rs. 3 = Rs. 1,20,000 20,000 units *Re1 = Rs. 20,000

Budgted purchase = units required Budgted Production + closing stock of raw material - opening sock of raw material