Rida, Inc., a manufacturer in a seasonal industry, is preparing its direct mater

Question

Rida, Inc., a manufacturer in a seasonal industry, is preparing its direct materials budget for the second quarter. It forecasts sales of 241,000 units in the second quarter and 278,500 units in the third quarter. It also plans production of 68,500 units for the third quarter. Based on this information, the company plans to produce 282,000 units in the second quarter. Other information is as follows:

Direct materials Each unit requires 0.50 pounds of a key raw material, priced at $191 per pound. The company plans to end each quarter with an ending inventory of materials equal to 50% of next quarter’s budgeted materials requirements. Direct labor Each finished unit requires 3 direct labor hours, at a cost of $10 per hour. Variable overhead Applied at the rate of $12 per direct labor hour. Fixed overhead Budgeted at $610,000 per quarter Prepare a direct materials budget for the second quarter. (Round your per unit to 2 decimal places.)

Explanation / Answer

RIDA INC Direct Material Budget Second Quarter Unit to be Produced Units          282,000 Material Needed for production Pounds          141,000 (0.5X 282000) Total material Requirement Pounds          193,500 (0.5X 282000)+ (0.5 X(278500-68500))X 50% Material needs to be purchase Pounds          140,125 (0.5X 282000)+ (0.5 X(278500-68500))X 50%- ((282000-68500)*0.5)X 50% Total cost of Direct material purchase $    26,763,875 (140125 X 191)

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