2. Prepare the companys proucon budget io the upog EXERCISE 9-3 Direct Materials

Question

2. Prepare the companys proucon budget io the upog EXERCISE 9-3 Direct Materials Purchases Budget [LO2] Exercise 9-3: Help Me Solve It Tutorial Click here to view a transcript of this video Micro Products Inc. has developed a very powerful el three small chips that cost $3 each and are purchased from an overseas supplier. Micro Pr prepared a production budget for the calculator by quarters for year 2 and for the first quarter of year 3, as shown below: calculator. Each calculator requires oducts has Year 3 h First Year 2 aato00 9000 0000 10 800 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 stock-outs. For this reason, the inventory of chips at the end f a quarter must be equal to 20% of the following quarter's production needs. A total of 36,000 chips will be on hand to start the first quarter of year 2. Required: Prepare a direct materials purchases budget for chips, by quarter and in total, for year 2. At the bottom of your budget, show the dollar amount of purchases for each quarter and for the year in total. EXERCISE 9-4 Direct Labour Budget [LO2] The manu facturing division manager of Davison Enterprises has submitted the following production forecast (n units) for each quarter of the next fiscal year. The plant produces seats for motorcycles:

Explanation / Answer

MATERIAL PURCHASE BUDGET Q1 Q2 Q3 Q4 YEAR-2 Q1 YR-3 Budgeted Production Units 60,000 90,000 150,000 100,000 400,000 80,000 Requirement of raw material per unit 3 3 3 3 3 3 Total production requirement 180,000 270,000 450,000 300,000 1,200,000 240,000 Add: Desired Ending Raw material inventory 54,000 90,000 60,000 48,000 48,000 Total Needs 234,000 360,000 510,000 348,000 1,248,000 Less: Beginning Raw material Inventory 36,000 54,000 90,000 60,000 36,000 Total Raw material Purchase units 198,000 306,000 420,000 288,000 1,212,000 Raw material cost 3 3 3 3 3 Budgeted Raw material purchase in $ 594,000 918,000 1,260,000 864,000 3,636,000

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