Question
stenback Industries manufactures a popular interactive stuffed animal for children that requires two two computer chips inside each toy. The company pays $ 4 for
stenback Industries manufactures a popular interactive stuffed animal for children that requires two
two computer chips inside each toy. The company pays $ 4 for each computer chip. To help to guard against stockouts of the computerchip, Stenback
Stenback Industries has a policy that states that the ending inventory of computer chips should be at least 25% of the followingmonth's production needs. The production schedule for the first four months of the year is asfollows:
stuffed animal to be produced
jan . 5,200
feb 4,300
march 4,500
april 4,900
Requirement
need 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.
jan . feb march . quarter .
Units to be produced
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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