Purchase Solution

Direct Materials Budget

Not what you're looking for?

Ask Custom Question

Micro Products, Inc., has developed a very powerful electronic calculator. Each calculator requires four small "chips" that cost $2 each and are purchased from an overseas supplier. Micro Products has prepared a production budget for the calculator by quarters for Year 2 and for the first quarter of Year 3, as shown below:

Year 2 Year 3
First Second Third Fourth First
Budgeted production, in calculators 60,000 85,000 144,000 94,000 70,000

The chip used in production of the calculator is sometimes hard to get, so it is necessary to carry large inventories as a precaution against stock outs. For this reason, the inventory of chips at the end of a quarter must be equal to 20% of the following quarter's production needs. Some 48,000 chips will be on hand to start the first quarter of Year 2.

Required:
Prepare a direct materials budget for chips, by quarter and in total, for Year 2. At the bottom of your budget, show the dollar amount of purchases for each and for the year in total.

Year 2
First Second Third Fourth Year
Production needs - chips
Add: Desired ending inventory-chips
Total needs - chips
Less: Beginning inventory-chips
Required purchases - chips
Cost of purchases

Attachments
Purchase this Solution
Solution Summary

The solution explains how to prepare a direct material purchases budget

Purchase this Solution
Free BrainMass Quizzes
Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

View More Free Quizzes
Related BrainMass Solutions

  • Samano Industries and Pacer, Inc.

    Prepare a direct materials purchases budget by month of the first quarter 2. Pacer, Inc, is preparing its direct labor budget for 2005 from the following production budget based on a calendar year.

  • Budgeting

    Scarborough Corporation Direct Materials Purchases Budget (in quantities) for 2007 Direct Materials A B C Direct materials to be used in production Thingone (budgeted production of 65,000 units

  • Cost Accounting, Flexible Budget, Static Budget & Variances

    Why might Bank Management find the flexible- budget- based variance analysis more informative than the static- budget- based variance analysis? Explain your answer. 7- 35 Direct manufacturing labor and direct materials variances, missing data.

  • Production Budget / Material Purchase Budget

    BATISTA COMPANY Direct Materials Budget For the Six Months Ending June 30, 2009 Quarter Six 1 2 Months Direct materials per unit × × Total pounds needed for production Add: Total materials required Less:

  • Constructing a Direct Materials Budget

    302277 Constructing a Direct Materials Budget Preparing a direct materials budget: It takes 3 pounds of direct materials to produce the Regular product and 5 pounds of direct materials to produce the Deluxe product.

  • Components of master budget

    The production budget is typically expressed in terms of physical units rather than in dollars. The Direct Materials Budget : Once production needs have been determined, a direct materials budget should be prepared.

  • Embleton, Samano, Pacer: CVP graph, break-even, direct labor

    materials purchases budget.

  • Direct materials purchases budget by month for the first quarter.

    454601 Direct materials purchases budget by month for the first quarter. See the attached file for proper format. E20-5 Moreno Industries has adopted the following production budget for the first 4 months of 2011.

  • Budgets

    finished goods units 30,000 10,000 Direct materials budget: Direct materials per unit (pounds) 2 3 Desired ending direct materials pounds 30,000 15,000 Beginning direct materials pounds 40,000 10,000

  • sales,direct material, direct labour and production budgets

    budget: Desired ending finished goods units 25,000 15,000 Beginning finished goods units 30,000 10,000 Direct materials budget: Direct materials per unit (pounds) 2 3 Desired ending

View More Related Solutions