Question 7 Dodd Company makes and sells a single product. Each finished unit req
ID: 2585445 • Letter: Q
Question
Question 7
Dodd Company makes and sells a single product. Each finished unit requires
four pounds of direct materials. The budgeted units to be produced for the
third quarter of the current year are given below:
Budgeted Units to be Produced
July
26,000 units
August
21,000 units
September
33,000 units
The company wants to maintain monthly ending inventories of direct materials
equal to 35% of the next month's production needs. The cost of the direct
materials is $1.75 per pound.
Assume Dodd Company pays for 60% of a month's purchases of direct materials
in the month of purchase and the other 40% is paid in the following month.
Calculate the total cash budgeted to be paid in August for direct material
purchases. Do not use decimals in your answer.
Budgeted Units to be Produced
July
26,000 units
August
21,000 units
September
33,000 units
Explanation / Answer
Budgeted purchase :
Calculate the total cash budgeted to be paid in August for direct material
purchases. Do not use decimals in your answer.
Cash paid in august for material purchase = (169750*40%+176400*60%) = 173740
July August Production unit 26000 21000 raw material per unit 4 4 Raw material for production 104000 84000 Add: Desired ending inventory 29400 46200 Total needs 133400 130200 Less: Beginning inventory (36400) (29400) Material to be purchased 97000 100800 Rate per pound 1.75 1.75 Purchase cost 169750 176400Related Questions
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