Question

In: Accounting

The Tobler Corporation has budgeted production for next year as follows: Quarter First Second Third Fourth...

The Tobler Corporation has budgeted production for next year as follows:

Quarter
First Second Third Fourth
Production in units 10,000 12,000 16,000 14,000

Four pounds of raw materials are required for each unit produced. Raw materials on hand at the start of the year total 4,000 pounds. The raw materials inventory at the end of each quarter should equal 20% of the next quarter's production needs. Budgeted purchases of raw materials in the second quarter would be:

Multiple Choice

  • 63,200 pounds

  • 51,200 pounds

  • 50,400 pounds

  • 49,600 pounds

Solutions

Expert Solution

Ans. Option 2nd 51,200 pounds
Particulars Quarter 2
Units to be produced 12000
(X) Direct materials per unit 4
Total pounds needed for production 48000
Add: Desired ending direct materials (pounds) 12800
Total materials required 60800
Less: Beginning direct materials (pounds) -9600
Materials to be purchased 51,200
*Working Notes:
*Calculations for materials needed for production in Quarter 3 :
Particulars Quarter 3
Units to be produced 16000
(X) Direct materials per unit 4
Total pounds needed for production 64000
*Ending inventory of Quarter 2 = Total pounds needed in Quarter 3 *20%
64,000 * 20%
12800
*Beginning inventory for Q 2 = Ending inventory of Q 1 = Total pounds needed in Q 2 * 20%
48,000 * 20%
9600

ekkarill92 answered 2 years ago
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