Answer:
$394,500
Explanation:
expected quarterly sales of:
- first quarter 20,000 units
- second quarter 25,000 units
- third quarter 30,000 units
- fourth quarter 25,000 units
sales price $40 per unit
ending inventory of finished units = 20% of next quarter's sales volume
each unit requires 3 kgs of direct materials that cost $5 each kg
production needs for quarter 2 = quarter sales + ending inventory of finished units - beginning inventory of finished units = 25,000 units + (30,000 units x 20%) - (25,000 units x 20%) = 25,000 + 6,000 - 5,000 = 26,000 units
production needs for quarter 3 = 30,000 units + (25,000 units x 20%) - (30,000 units x 20%) = 30,000 + 5,000 - 6,000 = 29,000 units
<u>Materials Budget for Quarter 2</u>
Units to be produced 26,000
<u>Direct materials per unit 3</u>
Total direct materials needed
for production 78,000
Ending direct materials 8,700
(29,000 x 3 x 10%)
- Beginning direct materials (7,800)
<u>(26,000 x 3 x 10%) </u>
direct materials purchases 78,900
<u>cost per kg $5</u>
cost of direct materials purchases $394,500
