Hi, can you help with the formulas and answers. Thanks! Step 3: Direct Materials

Question

Hi, can you help with the formulas and answers. Thanks!

Step 3: Direct Materials Budget (Points possible: 2) Buff Company maintains an ending inventory equal 20% of the next quarter's production requirements. Use this and the information below to prepare the Direct Materials Budget Number of pounds of direct materials required to for each product: 3.00 Expected cost per pound $1.00 600 Desired ending inventory of direct materials for quarter 4 of 2017, in pounds 1,000 Beginning inventory of direct materials for quarter 1 of 2017, in pounds Buff Company Direct Materials Budget For the year ending December 31, 2017 Quarter Year 1,300 nits to be produced irect materials per unit otal pounds needed for production dd: Desired ending direct materials (pounds) otal materials required ess: Beginning direct materials (pounds) irect materials purchases ost per pound otal cost of direct materials purchases 2,300 1,600 2,100

Explanation / Answer

  Buff Company

Direct Materials Budget   

For the year ending December 31, 2017 (Amount in $)

Workings:

1) Desired Ending inventory is 20% of the next quarter's production requirement (i.e. for Qtr 1 = $6,900*20% = $1,380 and so on for other quarters).

2) Beginning direct materials is equal to desired ending inventory of last quarter.

Particulars Qtr 1 Qtr 2 Qtr 3 Qtr 4 Year 1) Units to be produced 1,300 2,300 1,600 2,100 7,300 2) Direct Materials per unit 3.00 3.00 3.00 3.00 3.00 3) Total pounds needed for production (1*2) 3,900 6,900 4,800 6,300 21,900 4) Desired Ending direct materials (20% of next quarter production requirement) 1,380 960 1,260 1,000 1,000 5) Total materials required (3+4) 5,280 7,860 6,060 7,300 22,900 6) Beginning direct materials (600) (1,380) (960) (1,260) (600) 7) Direct Materials purchases (5-6) 4,680 6,480 5,100 6,040 22,300 8) Cost per pound $1.00 $1.00 $1.00 $1.00 $1.00 9) Total cost of direct materials purchases (7*8) 4,680 6,480 5,100 6,040 22,300

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