Question

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 $.

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