ECONOMICS

Detailed explanation-1: -The direct materials purchases budget will show how many materials need to be purchased. The formula for this budget is as follows: Quantity of Direct Materials Needed for Production + Desired Ending Materials Balance-Beginning Materials = Direct Materials to be Purchased.

Detailed explanation-2: -What is the Direct Materials Budget? The direct materials budget calculates the materials that must be purchased, by time period, in order to fulfill the requirements of the production budget. It is typically presented in either a monthly or quarterly format in the annual budget.

Detailed explanation-3: -The direct material budget consists of all raw materials the manufacturing company holds in its inventory and any materials they purchase. It also includes all materials production and raw materials that the company plans to use to manufacture the units it estimates to produce within a certain period.