Answer:
Instructions are listed below.
Explanation:
Giving the following information:
1st Quarter - 2nd Quarter - 3rd Quarter - 4th Quarter
Units to be produced: 6,000 - 7,000 - 8,000 - 5,000
the beginning raw materials inventory= 3,600
Each unit requires three pounds of raw material that costs $2.50 per pound. Management desires to end each quarter with a raw materials inventory equal to 20% of the following quarter
I will assume that the requirements are the cost of direct material for each quarter.
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<u>The direct material budget is calculated by the following formula:</u>
Direct material budget= direct material for production + ending inventory - beginning inventory
Q1:
Production= (6,000*3)*$2.5= $45,000
Ending inventory= [(7,000*3)*$2.5]*0.20= $10,500
Beginning inventory= (3,600*2.5)= (9,000)
Total= $46,500
Q2:
Production= (7,000*3)*$2.5= $52,500
Ending inventory= [(8,000*3)*$2.5]*0.20= $12,000
Beginning inventory= (10,500)
Total= $54,000
Q3:
Production= (8,000*3)*$2.5= $60,000
Ending inventory= [(5,000*3)*$2.5]*0.20= $7,500
Beginning inventory= (12,000)
Total= $55,500
