Two Yards of a Fabric Are Required for Each Blouse

Essay

Two yards of a fabric are required for each blouse produced by Northern Shirt Corporation. The cost of the fabric is $4 per yard. Budgeted production of blouses is given below for the fourth quarter and the first month of the following quarter. To prevent against stock outs of the fabric, the company maintains an ending inventory each month equal to 10% of the next month's production needs. The beginning inventory of the fabric in October will be 3,600 yards.
Required:
Prepare a direct materials budget for the fabric, by month and in total for the fourth quarter. Be sure to include both the quantity to be purchased and its cost for each month.