Question

Tangshang Industries production budget from the 2^nd quarter of 2018, projected the following amounts of units to be produced:

April 1,000 units

May    1,200 units

June    1,250 units

Each unit requires 2 parts of component A and 3 parts of component B. Component A cost is $1.25 per unit and component B cost is $.80 per unit.

A. Calculate the Direct Material budgeted cost for May 2018

B. Calculate the Direct Material budgeted cost for the quarter April - June 2018

C. The raw materials inventory policy is 0 ending inventory, 0 beginning inventory. How much inventory of component A is required in April 2018?

Answer 1

	Computation of direct material Budgeted cost for Apr-Jun
B.	unit to be produced in
	Apr-18	1000
	May-18	1200
	Jun-18	1250
	Total Unit in quarter -2	3450
	Material required
	Component A ( in No.)	6900
	( 2part for each unit) = ( 3450*2)
	Cost /per Unit	$1.25
	Total cost of Component A for producting 3450 unit (1)	$8,625.00
	(6900*$1.25)
	Component B ( in No.)	10350
	( 3part for each unit) = ( 3450*3)
	Cost /per Unit	$0.80
	Total cost of Component B for producting 3450 unit (2)	$8,280.00
	(10350*$0.80)
	Direct material Budget cost ( 1+2)	$16,905.00
A.	Computation of direct material Budgeted cost for May
	unit to be produced in
	May-18	1200 unit
	Material required
	Component A ( in No.)	2400
	( 2part for each unit) = ( 1200*2)
	Cost /per Unit	$1.25
	Total cost of Component A for producting 1200 unit (1)	$3,000.00
	(2400*$1.25)
	Component B ( in No.)	3600
	( 3part for each unit) = ( 1200*3)
	Cost /per Unit	$0.80
	Total cost of Component B for producting 3450 unit (2)	$2,880.00
	(3600*$0.80)
	Direct material Budget cost ( 1+2)	$5,880.00
C.	Computation of direct material Budgeted cost for May
	unit to be produced in
	Apr-18	1000 unit
	Material required
	Component A ( in No.)	2000
	( 2part for each unit) = ( 1000*2)
	Cost /per Unit	$1.25
	Total cost of Component A for producting 1000 unit (1)	$2,500.00
	(2000*$1.25)
	2000 unit of Component A are required in April month