Question

*Pablo Company has budgeted production for next year as follows: Quarter First Second Third Fourth Production...

*Pablo Company has budgeted production for next year as follows:

Quarter

First

Second

Third

Fourth

Production in units

60,000

80,000

90,000

70,000

Two pounds of material A are required for each unit produced. The company has a policy of maintaining a stock of material A on hand at the end of each quarter equal to 25% of the next quarter's production needs for material A. A total of 30,000 pounds of material A are on hand to start the year. Budgeted purchases of material A for the second quarter would be:

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Answer #1

Budgeted purchases of material A for the second quarter would be: 165,000 pounds of material A

Working

Direct Materials Budget
Quarter 1 Quarter 3 Quarter 2
Units to be produced 60000 80000 90000
Multiply by Quantity of Direct material needed per unit 2 2 2
Materials needed for Production (pounds) 120000 160000 180000
Plus: Desired Ending inventory of direct materials 40000 45000
Total Materials Requirement (pounds) 205000
Less: Beginning inventory for direct materials 40000
Materials to be purchased (Pounds) 165000
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