Roehler Industrial has estimated that production for the next 5 quarters will be
ID: 2377510 • Letter: R
Question
Roehler Industrial has estimated that production for the next 5 quarters will be:
Production Information
Quarter 1, 2011-------------------------------------------- 45,000 units
Quarter 2, 2011-------------------------------------------- 41,000
Quarter 3, 2011-------------------------------------------- 49,000
Quarter 4, 2011-------------------------------------------- 38,000
Quarter 1, 2012-------------------------------------------- 47,000
Finished units of production require 6 lbs of raw material per unit. The raw material cost is $5.00 per lb. There are 54,000 lbs of raw material on hand at the beginning of Quarter 1, 2012. Roehler desires to have 20% of next quarter's material requirements on hand at the end of each quarter.
Required:
Prepaer quarterly direct materials purchases budgets for Roehler Industries for 2011.
ROEHLER INDUSTRIES
Direct Materials Purchases Budget
For the Year Ending December 31, 2011
________________________________________________________________________________________________________
--------------------------------------------------------------------- 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 [ # ]
Explanation / Answer
Hi,
Please find the answer as follows:
Thanks.
Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year Quarter 1(next year) Units to be produced 270000 246000 294000 228000 1038000 282000 Cost of raw material per unit 5 5 5 5 5 5 Cost of raw material needed for production 1350000 1230000 1470000 1140000 5190000 1410000 Add: Desired ending inventory of raw material 246000 294000 228000 282000 282000
Total material needed 1596000 1524000 1698000 1422000 5472000
Less: Beginning inventory of raw material 270000 246000 294000 228000 270000
Required raw material purchases 1326000 1278000 1404000 1194000 5202000
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