Question

In: Finance

Tangshang Industries production budget from the 2nd quarter of 2018, projected the following amounts of units...

Tangshang Industries production budget from the 2nd 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?

Solutions

Expert Solution

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

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