Norton Manufacturing expects to produce 2,900 units in January and 3,600 units in February

Norton budgets $20 per unit for direct materials. Indirect materials are insignificant and not considered for budgeting purposes. The balance in the Raw Materials Inventory account (all direct materials) on January 1 is $38,650. Norton desires the ending balance in Raw Materials Inventory to be 10% of the next month's direct materials needed for production. Desired ending balance for February is $51,100. What is the cost of budgeted purchases of direct materials needed for January?
A) $58,000
B) $65,200
C) $26,550
D) $25,150

C .C)
Budgeted units to be produced in January 2,900
x Direct materials cost per unit $20
Direct materials needed for production $58,000
+Desired direct materials in ending inventory + 7,200*
= Total direct materials needed $65,200
-Direct materials in beginning inventory - 38,650
=Budgeted purchases of direct materials $26,550
* Desired direct materials in ending inventory = 3,600 x 20 x 10% = 7,200