(5pts) Direct Materials Budget Month January February March 1st Quarter 9,5009,8
ID: 2523314 • Letter: #
Question
(5pts) Direct Materials Budget Month January February March 1st Quarter 9,5009,800 Units to be produced 9,000 Multiply by: Quantity of DM needed per unit 15 Quantity needed for production Plus: Desired end inventory of DM Total quantity needed Less: Beginning inventory of DM Quantity to purchase Multiply by: Cost per yard $ 2.50 Total cost of DM purchases Note: January 1 inventory balance (1,100) is the same as the December 31 balance which is calculated as 10% of the quantity needed for production in January. The expected output for April is 10,000 units. (5pts)Explanation / Answer
Direct material Budget Jan Feb Mar Total Units to be produced 9000 9500 9800 28300 requirement per unit produced 1.5 1.5 1.5 1.5 Total requirement 13500 14250 14700 42450 ending inventory desired 1425 [14250*10%] 1470 1500 [10000*1.5*10%] 4395 less:beginning inventory (1100) (1425) (1470) (3995) Inventory to be purchased 13825 14295 14730 42850 cost per yard 2.5 2.5 2.5 2.5 Total cost of purchase 34562.5 35737.5 36825 107125 Flexible Budget performance report Actual result Flexible budget variance Flexible budget Volume variance MAster budget output 40 0 40 5 F 35 sales 26000 400 F 25600 3200 F 22400 variable expense 13500 300 U 13200 [ 11550*40/35] 11650 U 11550 fixed expense 5200 200 U 5000 0 NA 5000 Total expense 18700 500 U 18200 1650 U 16550
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