HSS Industrial has estimated that production for the next five quarters will be:

Question

HSS Industrial has estimated that production for the next five quarters will be: Production Information 1st quarter, 201746,000 units 2nd quarter, 2017 41,000 units 3rd quarter, 2017 49,000 units 4th quarter, 2017 40,000 units 1st quarter, 2018 48,000 units Finished units of production require 10 pounds of raw material per unit. The raw material cost is $4 per pound. There is $184,000 of raw material on hand at the beginning of the first quarter, 2017. H55 desires to have 10 percent of next quarter's material requirements on hand at the end of each quarter Prepare quarterly direct materials purchases budgets for H55 Industrial for 2017

Explanation / Answer

Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total Units to be produced 46000 41000 49000 40000 176000 Cost of raw material per unit 40 40 40 40 40 Cost of raw material needed for production 1840000 1640000 1960000 1600000 7040000 Add desired ending inventory of raw material 164000 196000 160000 192000 192000 Total material needed 2004000 1836000 2120000 1792000 7232000 Less beginning inventory of raw material 184000 164000 196000 160000 184000 Required raw material purchases 1820000 1672000 1924000 1632000 7048000

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