Question
In: Accounting
Budgeting Direct Material The Jung corporation's budget calls for the following production Quarter1 45,000 units Quarter...
Budgeting Direct Material
The Jung corporation's budget calls for the following production
| Quarter1 | 45,000 | units | ||
| Quarter 2 | 38,000 | units | ||
| Quarter3 | 34,000 | units | ||
| Quarter4 | 48,000 | units | ||
Each unit of production requires three pounds of direct material. The company's policy is to begin each quarter with an inventory of direct materials equal to 30 percent of that quarter's direct material requirements.
required
Compute budgeted direct materials purchases for the third quarter
Solutions
Expert Solution
| Answer [Refer workingn note 1] | 114,600 | pounds |
.
.
| Working note 1 - Direct materials purchases for quarter 3 | ||
| Quarter 3 | ||
| Budgeted production (units) (a) | 34,000 | units |
| Direct materials requirement per unit (b) | 3 | pounds |
| Direct materials requirement for production (c = a x b) | 102,000 | pounds |
| Add: Desired ending direct materials inventory [Refer working note 2] (d) | 43,200 | pounds |
| Total (e = c + d) | 145,200 | pounds |
| Less: Beginning direct materials inventory [Refer working note 3] (f) | 30,600 | pounds |
| Direct materials purchases (e - f) | 114,600 | pounds |
.
.
| Working Note 2 - Desired ending direct materials inventory for Quarter 3 | ||
| Desired ending direct materials inventory for Quarter 3 = Beginning direct materials inventory for Quarter 4 = Direct material requirements in Quarter 4 x 30% | ||
| Budgeted production for Quarter 4 (a) | 48,000 | units |
| Direct materials requirement per unit (b) | 3 | pounds |
| Direct materials requirement for production in Quarter 4 (a x b) | 144,000 | pounds |
| Beginning direct materials inventory for Quarter 4 (144,000 pounds x 30%] | 43,200 | pounds |
| Desired ending direct materials inventory for Quarter 3 | 43,200 | pounds |
.
.
| Working note 3 - Beginning direct materials inventory for Quarter 3 | ||
| Beginning direct materials inventory for Quarter 3 = Direct material requirements in Quarter 3 x 30% | ||
| Budgeted production for Quarter 3 (a) | 34,000 | units |
| Direct materials requirement per unit (b) | 3 | pounds |
| Direct materials requirement for production in Quarter 3 (a x b) | 102,000 | pounds |
| Beginning direct materials inventory for Quarter 3 (102,000 pounds x 30%] | 30,600 | pounds |
.
.
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