Potter Inc. has estimated that production for the next five quarters will be: Pr
ID: 2371233 • Letter: P
Question
Potter Inc. has estimated that production for the next five quarters will be: Production Information Quarter 1,2011 45,000 Units Quarter 2,2011 41,000 Units Quarter 3,2011 49,000 Units Quarter 4,2011 38,000 Units Quarter 1,2012 47,000 Units Finished units of production require 6 pounds of raw material per unit. The raw material cost is $5.00 per pound. There 54,000 pounds of raw material on hand at the beginning of quarter 1, 2012. Potter desires to have 20% of next quarter's material requirements on hand at the end of each quarter. REQUIRED: Prepare quarterly direct materials purchases budgets for Potter Inc. for 2011. Potter Inc. Direct Materials Purchases Budget For the Year Ending December 31, 2011 ------------------------------------------------------------------------------------------------- Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year Units to be produced ______ _____ _____ _____ ___ Cost of raw material per unit ______ _____ _____ _____ ___ Cost of raw material needed for production ______ _____ _____ _____ ___ Add desired ending inventory of raw material ______ _____ _____ _____ ___ Total material needed ______ _____ _____ _____ ___ Less beginning inventory of raw material ______ _____ ______ _____ ___ Required raw material purchases ______ _____ ______ _____ ____ Potter Inc. has estimated that production for the next five quarters will be: Production Information Quarter 1,2011 45,000 Units Quarter 2,2011 41,000 Units Quarter 3,2011 49,000 Units Quarter 4,2011 38,000 Units Quarter 1,2012 47,000 Units Finished units of production require 6 pounds of raw material per unit. The raw material cost is $5.00 per pound. There 54,000 pounds of raw material on hand at the beginning of quarter 1, 2012. Potter desires to have 20% of next quarter's material requirements on hand at the end of each quarter. REQUIRED: Prepare quarterly direct materials purchases budgets for Potter Inc. for 2011. Potter Inc. Direct Materials Purchases Budget For the Year Ending December 31, 2011 ------------------------------------------------------------------------------------------------- Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year Units to be produced ______ _____ _____ _____ ___ Cost of raw material per unit ______ _____ _____ _____ ___ Cost of raw material needed for production ______ _____ _____ _____ ___ Add desired ending inventory of raw material ______ _____ _____ _____ ___ Total material needed ______ _____ _____ _____ ___ Less beginning inventory of raw material ______ _____ ______ _____ ___ Required raw material purchases ______ _____ ______ _____ ____Explanation / Answer
Hi,
Please find the answer as follows:
Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year Units to be Produced 45000 41000 49000 38000 173000 Cost of Raw Material Per Unit 30 30 30 30 30 Cost of raw material needed for production 1350000 1230000 1470000 1140000 5190000 Add Desired ending inventory of Raw Material 246000 294000 228000 270000 1038000 Total Material Needed 1596000 1524000 1698000 1410000 6228000 Less Beginning ending inventory of Raw Material 270000 246000 294000 228000 1038000 Required raw material purchases 1326000 1278000 1404000 1182000 5190000
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