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.
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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