Purchases and Cash Payments. A production plan by quarter for Storr Company is: Four units of materials
Question:
Purchases and Cash Payments. A production plan by quarter for Storr Company is:
Four units of materials are used in producing each unit of product. Each unit of materials costs $0.60. Ending materials inventory is to be equal to 25 percent of production requirements for the next quarter. This requirement was met at the beginning of the year. Production for the first quarter following the budget year is estimated at 28,000 units. Accounts payable for materials purchased is estimated at $38,400 at the beginning of the current budget year. Forecast accounts payable at the end of the quarter should equal 40 percent of the purchases during the quarter.
Required:
1. Determine the units of materials to be purchased each quarter.
2. Determine the cost of materials purchases by quarter.
3. Estimate the payments to be made each quarter for materials.
Step by Step Answer:
Managerial Accounting
ISBN: 9780538842822
9th Edition
Authors: Harold M. Sollenberger, Arnold Schneider, Lane K. Anderson