Question

Junker Corp. budgets its monthly production of doohickeys for       the first four months of the...

Junker Corp. budgets its monthly production of doohickeys for       the first four months of the year as follows: January 32,500       units; February 38,500 units; March 39,750 units; April 38,750         units.

          Each doohickey requires 5 pounds of gunk. Gunk costs         $0.50/pound.  

          The company’s policy is ending inventory of raw materials each    month must be 20% of the following month’s production needs.

         

          Prepare a materials purchase budget for the Jan-Mar quarter in       pounds of gunk and $.

Business   Accounting   
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Answer #1
Jan Feb March Quarter April
Poduction Units 32500 38500 39750 110750 38750
Raw material require per unit 5 5 5 5 5
Total raw material requirement 162500 192500 198750 553750 193750
Add: Desired Ending Inventory 38500 39750 38750 38750
Total raw material requirement 201000 232250 237500 592500
Less: Desired Beginning Inventory 32500 38500 39750 32500
Budgeted Raw material purchase units 168500 193750 197750 560000
Raw material cost per unit 0.5 0.5 0.5 0.5
Budgeted Raw matrial purchase in $ 84250 96875 98875 280000
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