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 1 year ago

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