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How do you find the quantity of direct materials needed per unit? Austen Manufacturing produces self-watering planters for use in upscale retail establishments. Sales projections
How do you find the quantity of direct materials needed per unit?
Austen Manufacturing produces self-watering planters for use in upscale retail establishments. Sales projections for the first five months of the upcoming year show the estimated unit sales of the planters each month to be as follows: (Click the icon to view additional information.) Inventory at the start of the year was 750 planters. The desired inventory of planters at the end of each month should be equal to 25% of the following month's budgeted sales. Each planter requires two pounds of polypropylene (a type of plastic). The company wants to have 20% of the polypropylene required for next month's production on hand at the end of each month. The polypropylene costs $0.20 per pound. Read the requirements. Requirement 2. Prepare a direct materials budget for the polypropylene for each month in the first quarter of the year, including the pounds of polypropylene required and the total cost of the polypropylene to be purchased. Start by preparing the direct materials budget through the total quantity needed, then complete the budget. Austen Manufacturing Direct Materials Budget For the Months of January through March January February March Quarter Units to be produced 3050 3175 3375 9600 Multiply by: Quantity of direct materials needed per unit Quantity needed for production Plus: Desired ending inventory of direct materials Total quantity neededStep by Step Solution
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