Roehler Industrial has estimated that production for the next five quarters will

Question

Roehler Industrial has estimated that production for the next five quarters will be:

Finished units of production require 8 pounds of raw material per unit. The raw material cost is $6 per pound. There is $288,000 of raw material on hand at the beginning of the first quarter, 2014. Roehler 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 Roehler Industrial for 2014.

Production Information 1st quarter, 2014 40,000 units 2nd quarter, 2014 36,000 units 3rd quarter, 2014 43,000 units 4th quarter, 2014 34,000 units 1st quarter, 2015 41,000 units                                                                                                   

Explanation / Answer

Direct Material Purchase Budget for 2014 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Units 40000 36000 43000 34000 41000 Sales 320000 288000 344000 272000 328000 Op. Raw Material 288000 43200 51600 40800 49200 Cl. Raw Material 43200 51600 40800 49200 36000*8*15% 43000*8*15% 34000*8*15% 41000*8*15% Purchase 75200 296400 333200 280400 Sales+Cl-Op

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