Roehler Industrial has estimated that production for the next five quarters will
ID: 2451233 • Letter: R
Question
Roehler Industrial has estimated that production for the next five quarters will be:
Finished units of production require 5 pounds of raw material per unit. The raw material cost is $5 per pound. There is $153,750 of raw material on hand at the beginning of the first quarter, 2014. Roehler desires to have 15 percent of next quarter's material requirements on hand at the end of each quarter.
Prepare quarterly direct materials purchases budgets for Roehler Industrial for 2014.
Roehler Industrial
Direct Materials Purchases Budget
For the Year Ending December 31, 2014
Quarter 1
Quarter 2
Quarter 3
Quarter 4
Year
Production Information 1st quarter, 2014 41,000 units 2nd quarter, 2014 37,000 units 3rd quarter, 2014 44,000 units 4th quarter, 2014 34,000 units 1st quarter, 2015 42,000 unitsExplanation / Answer
Opening value Raw Materials 153,750 Rate /Ib 5 Opening Raw material qty 30,750 Roehler Industrial Direct Materials Purchase Budget For the year ending Dec 31. 2014. Details Q1 Q2 Q3 Q4 Total 2014 Q1 2015 Production Units 41,000 37,000 44,000 34,000 156,000 42,000 Raw materials required for production @5 ib/unit 205,000 185,000 220,000 170,000 780,000 210,000 Desired ending inventory of raw material 27,750 33,000 25,500 31,500 117,750 - Less : Opening Qty of Raw Material Inventory 30,750 27,750 33,000 25,500 117,000 Required purchase of Raw materials in Ib 202,000 190,250 212,500 176,000 780,750 Raw Material cost/Ib=$5 Total purchase cost /Qtr 1,010,000 951,250 1,062,500 880,000 3,903,750
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