In: Accounting
Marshall Industrial has estimated that production for the next 5 quarters will be: Production Information Quarter 1, 2017-------------------------------------------- 51,000 units Quarter 2, 2017-------------------------------------------- 46,000 Quarter 3, 2017-------------------------------------------- 55,000 Quarter 4, 2017-------------------------------------------- 43,000 Quarter 1, 2018-------------------------------------------- 53,000 Finished units of production require 7 lbs of raw material per unit. The raw material cost is $8.00 per lb.
There is $428,400 of raw material on hand at the beginning of the first quarter, 2017. Marshall desires to have 15 percent of next quarter's material requirements on hand at the end of each quarter.
Prepare quarterly direct materials purchases budgets for Marshall Industrial for 2017.
________________________________________________________________________________________________________ --------------------------------------------------------------------- Quarter 1 ------- Quarter 2 -------- Quarter 3 -------- Quarter 4 -------- Year
Units to be produced [ # ] Cost of raw material per unit [ # ] Cost of raw material needed for production [ # ] Add desired ending inventory of raw material [ # ] Total material needed [ # ] Less beginning inventory of raw material [ # ] Required raw material purchases [ # ]
Direct materials purchases budgets | ||||||
Particulars | Quarter 1, 2017 | Quarter 2, 2017 | Quarter 3, 2017 | Quarter 4, 2017 | Year | |
Units of FG | 51,000 | 46,000 | 55,000 | 43,000 | 1,95,000 | |
Opening Stock | 53,550 | 48,300 | 57,750 | 45,150 | 53,550 | |
Raw Material required for Production | 3,57,000 | 3,22,000 | 3,85,000 | 3,01,000 | 13,65,000 | |
Next Months Material Requirement 15% | 48,300 | 57,750 | 45,150 | 55,650 | 55,650 | |
Material require to purchase | 3,51,750 | 3,31,450 | 3,72,400 | 3,11,500 | 13,67,100 |