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In: Accounting

Marshall Industrial has estimated that production for the next 5 quarters will be: Production Information Quarter...

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 [ # ]

Solutions

Expert Solution

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

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