Wednesday, February 27, 2008

Calculate Direct Material (DM) Purchase Budget

Use this equation to calculate the Direct Material (DM) Purchase Budget for a manufacturing company:

Amount of raw material required for production
+ Number of raw materials desired in ending inventory
= Total number of raw materials required
- Amount of raw materials in beginning inventory
= Amount of raw materials to purchase
x Cost Per Raw Material
= Direct Material (DM) (in dollars) to purchase this period

Extra Accounting Examples and Practice Problems:

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