Question

company 5 feet by 5 feet wires. To produce one of these wires requires 30 square...

company 5 feet by 5 feet wires. To produce one of these wires requires 30 square feet of copper. Production needs for the year 2017 are as follows: 6,000 units in quarter 1; 7,000 units in quarter 2; 8,000 units in quarter 3; and 9,000 units in quarter 4. First quarter of 2018 expects production of 10,000 units. Each square foot of copper costs $5. Beginning inventory of canvas for the year is 800 square feet. Bob, wants to have 10% of direct materials needed for following quarter's production needs. Instructions Prepare a quarterly direct material purchases budget for 2017.

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Answer #1

Direct material purchase budget

Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year
Production units 6000 7000 8000 9000 30000
Direct material needed for production 30 30 30 30 30
Direct material needed for production 180000 210000 240000 270000 900000
Add: Desired ending inventory 21000 24000 27000 30000 30000
Total required 201000 234000 267000 300000 930000
Less: Beginning inventory -800 -21000 -24000 -27000 -800
Direct material purchase 200200 213000 243000 273000 929200
Cost per square feet 5 5 5 5 5
Cost of material purchase 1001000 1065000 1215000 1365000 4646000
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