Question

Rose Sdn. Bhd. (RSB) produces two products, which are Standard and Advanced. The followings are the budgeted units to be produced by RSB for 2019:

Standard (units) Advanced (units) Total Units July April 7,000 12,000 19,000 August May 8,000 13,000 21,000 September June 9,000 14,000 23,000 October July 10,000 15,000 25,000

It takes 3 pounds of direct materials to produce the Standard product and 4 pounds of direct materials to produce the Advanced product. It is the company's policy to maintain an inventory of direct materials on hand at the end of each month equal to 25% of the next month's production needs for the Standard product and 22% of the next month's production needs for the Advanced product. Direct materials inventory on hand at 31 March were 5,500 pounds for the Standard product and 11,500 pounds for the Advanced product. The cost per pound of materials is RM6 Standard and RM7 Advanced.

Required:

Prepare separate direct materials budgets for each product for the second quarter of 2019.

  

Answer 1

RSB
Direct Materials Budget-Standard Product
	April	May	June	Second Quarter
Budgeted Production(in units)	7,000	8,000	9,000	24,000
Units of raw materials needed per unit of finished goods(gms)	3.00	3.00	3.00	3.00
Units of raw materials needed to meet production	21,000	24,000	27,000	72,000
Add:Desired direct material ending inventory	6,000	6,750	7,500	7,500
Total units of material needed	27,000	30,750	34,500	79,500
Less:Desired direct material beginning inventory	(5,500)	(6,000)	(6,750)	(5,500)
Units of raw material to be purchased	21,500	24,750	27,750	74,000
Unit cost of raw materials	RM6	RM6	RM6	RM6
Cost of raw materials to purchased	RM129,000	RM148,500	RM166,500	RM444,000
RSB
Direct Materials Budget-Advanced Product
	April	May	June	Second Quarter
Budgeted Production(in units)	12,000	13,000	14,000	39,000
Units of raw materials needed per unit of finished goods(gms)	4.00	4.00	4.00	4.00
Units of raw materials needed to meet production	48,000	52,000	56,000	156,000
Add:Desired direct material ending inventory	11,440	12,320	13,200	13,200
Total units of material needed	59,440	64,320	69,200	169,200
Less:Desired direct material beginning inventory	(11,500)	(11,440)	(12,320)	(11,500)
Units of raw material to be purchased	47,940	52,880	56,880	157,700
Unit cost of raw materials	RM7	RM7	RM7	RM7
Cost of raw materials to purchased	RM335,580	RM370,160	RM398,160	RM1,103,900