Perine Company has 1,640 pounds of raw materials in its December 31, 2019, ending inventory. Required production for January and February of 2020 are 4,100 and 5,600 units, respectively. 2 pounds of raw materials are needed for each unit, and the estimated cost per pound is $6. Management desires an ending inventory equal to 20% of next month's materials requirements. Prepare the direct materials budget for January.

Direct material budget:

Sales = $49,200

Ending inventory = $13,440

Beginning inventory = $ (9,840)

Total = $52,800

Explanation:

Giving the following information:

Beginning inventory = 1,640 pounds of raw materials.

Required production:

January = 4,100 units

February = 5,600 units

2 pounds of raw materials are needed for each unit

The estimated cost per pound is $6.

Management desires an ending inventory equal to 20% of next month's materials requirements.

Direct material budget:

Sales = (4,100*2) * $6 = $49,200

Ending inventory = [ (5,600*2) * 0.20]*$6 = $13,440

Beginning inventory = (1,640*6) = (9,840)

Total = $52,800