Need help figuring out this problem. I have done most of it. Micro Products, Inc

Question

Need help figuring out this problem. I have done most of it.

Micro Products, Inc., has developed a very powerful electronic calculator. Each calculator requires four small chips that cost $6 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

     

    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 stockouts. For this reason, the inventory of chips at the end of a quarter must equal 15% of the following quarters production needs. A total of 30,600 chips will be on hand to start the first quarter of Year 2.

     

Prepare a direct materials budget for chips, by quarter and in total, for Year 2. (Do not round intermediate calculations. Input all amounts as positive values. Omit the "$" sign in your response.)

     

Quarter

Ý

Ý

Ý

Ý

Ý

Year 2

Year 3

First Second Third Fourth First   Budgeted production, in calculators 51,000 82,000 142,000 96,000 78,000

Explanation / Answer

add ending inventory for 4th quarter = 15% of 14,84,000 = 222600

total needs for 4th quarter = 384000+222600 = 606600

Required purchase chips =606600 - 57600 = 549000

total cost of purchase for

1) 1st quarter =222600 *6 =1335600

2) 2nd quarter = 364000*6 = 2184000

3) 3rd quarter = 540400*6 =3242400

4) 4th quarter = 549000*6 = 3294000

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