Roehler Industrial has estimated that production for the next five quarters will

Question

Roehler Industrial has estimated that production for the next five quarters will be: Production Information 1st quarter, 2014 49,000 units 2nd quarter, 2014 44,000 units 3rd quarter, 2014 52,000 units 4th quarter, 2014 42,000 units 1st quarter, 2015 50,000 units Finished units of production require 7 pounds of raw material per unit. The raw material cost is $3 per pound. There is $164,640 of raw material on hand at the beginning of the first quarter, 2014. Roehler desires to have 16 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.

Explanation / Answer

Roehler Industrial Quarterly Direct Material Purchase Budget for 2014 Year 2014 Total Details Q 1 Q2 Q3 Q4 Q1 2015 Production Units budgeted -FG            49,000              44,000           52,000        42,000        187,000      50,000 Raw material required(lb) per unit FG                       7                         7                      7                   7 Required Raw materials for Production (lbs)          343,000            308,000         364,000      294,000    1,309,000 350,000 Add Required Ending inventory Raw Materials            49,280              58,240           47,040        56,000 Less opeing Inventory Raw Materials            54,880              49,280           58,240        47,040 Required Purchase of Raw materials          337,400            316,960         352,800      302,960    1,310,120 Raw Material cost /lb=                       3                         3                      3                   3 Purchase Cost of Raw Materials      1,012,200            950,880     1,058,400      908,880    3,930,360

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