Question
A company manufactures a popular interactive stuffed animal for children that requires two computer chips inside each toy. The company pays $ 1 for each
A company manufactures a popular interactive stuffed animal for children that requires two computer chips inside each toy. The company pays $ 1 for each computer chip. To help to guard against stockouts of the computer chip, This company has a policy that states that the ending inventory of computer chips should be at least 25% of the following month's production needs. The production schedule for the first four months of the year is as follows:
Stuffed Animals Produced
January....5400
February..4200
March......4700
April........4500
Prepare a direct materials budget for the first quarter that shows both the number of computer chips needed and the dollar amount of the purchases in the budget.
January | February | March | Quarter | |
Units to be proudced | ||||
Multiply by: Quantity of direct materials needed per unit | ||||
Quantity needed for production | ||||
Plus: Desired ending inventory of direct materials | ||||
Total quantity needed | ||||
Less: Beginning inventory of direct materials | ||||
Quantity to purchase | ||||
Multiply by: Cost per unit | ||||
Total cost of direct material purchases |
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