The cost of direct materials for one snowboard is estimated to be $80. On Januar

Question

The cost of direct materials for one snowboard is estimated to be $80. On January 1, 2013 the balance in raw material inventory totaled $14,400. Alpine desires to have 20 percent of the next quarter’s production needs on hand at the end of each quarter. Alpine plans to product 1,136 snowboards in the first quarter of 2014. Therefore, the ending inventory in direct materials in the fourth quarter of 2013 should be $18,176.

1) Prepare a quarterly direct materials purchases budget for Alpine for the year 2013.

2) The snowboards re hand finished, requiring 12 hours of direct labor for each snowboard. Employees working on the snowboards average $6 per hour and work 480 hour per quarter. Prepare a quarterly direct labor budget for Alpine for 2013.

Explanation / Answer

Note: In the question details of Opening inventory are given for January 2013 and ending inventory are given for December 2013, hence it is not possible to compute quarterly purchase budgets. Therefore, total yearly budget is given.

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