Micro Products Inc. has developed a very powerful electronic calculator. Each calculator requires three small chips that cost $3 each and are purchased from an overseas supplier. Micro Products has prepared a production budget for the calculator by quarters for year 2 and for the first quarter of year 3, as shown below:

Micro Products Inc. has developed a very powerful electronic calculator. Each calculator requires three small chips that cost $3 each and are purchased from an oyersees supplier. Micro Products has prepared a production budget for the calculator by quarters for year 2 and for the rst quarter of year 0, as shown below: Year 2 Year 3 First Second 111ird Fourth First Budgeted production, in calculators 10,000 100,000 100,000 110,000 00,000 The chip used in production of the calculator is sometimes hard to get, so it is necessary to carry large inventories as a precaution against stock-outs. For this reason, the inventory of chips at the and of a quarter must be equal to 20% of the following quarter's production needs. A total of 54.000 chips will be on hand to start the rst quarter of year 2. Required: Prepare a direct materials purchases budget for chips, by quarter and in total, for year 2. At the bottom of your budget, show the dollar amount of purchases for each quader and for the year in total. Required production in calculators Number of chips per calculator Production needschips Total needs Required purchaseschips Total cost of purchases