Question
Smackaroos Enterprises manufactures two models of brooms, Model X2 and Model T3. The budgeted units to be produced are as follows: Model X2 Model T3
Smackaroos Enterprises manufactures two models of brooms, Model X2 and Model T3. The budgeted units to be produced are as follows:
| Model X2 | Model T3 | Total |
July | 8,750 | 9,250 | 18,000 |
August | 5,125 | 7,125 | 12,250 |
September | 7,350 | 9,000 | 16,350 |
October | 9,125 | 14,375 | 23,500 |
It takes 1.7 kilograms of direct materials to produce Model X2 and twice as many kilograms of direct materials to produce Model T3. It is the company's policy to maintain an inventory of direct materials on hand at the end of each month equal to 25% of the next month's production needs.
The cost per kilogram of materials is $4.50 for T3 while the cost per kilogram of materials for X2 is the cost of the materials for T3.
Instructions 15 MARKS
Prepare direct materials budgets for each product for the month of September.
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