Question

.UU Course Stevens Company manufactures electronic components used in automobile manufacturing. Each component uses two raw materials, Geo and Clio. Standard usage of the two materials required to produce one finished electronic component, as well as the current inventory, a pwn below. Material Per Unit Price Current 2.0 Geo pounds $15/b. - 5,0 1.5 Clio pounds $10/1b. 7,5 Stevens forecasts sales of 20,000 components for each of the next two production periods. Company policy dictates that 25% of the raw materials needed to produce the next period's projected sales be maintained in ending direct materials inventory Based on this information, what would the budgeted direct materials purchases for the coming period be?

Answer 1

- X Fox Geo B C D E Clio Humano budgeted sales of finished goods direct materials per unit of finished goods (lbs) production needs for current period (lbs) add: desired ending direct materials inventory (lbs) total direct material needs (lbs) less: beginning direct materials inventory (lbs) required direct material purchases (lbs) price per unit ($) budgeted direct material purchases Geo 20,000 2.0 40,000 10,000 50,000 5,000 45,000 $ 15 $ 675,000 20,000 1.5 30,000 7,500 37,500 7,500 30,000 $ 10 $ 300,000 > SU hence, the correct answer is d. Geo- $675,000 Clio-$300,000

for formulas and calculations, refer to the image below -

X for Geo А Geo 20000 budgeted sales of finished goods direct materials per unit of finished goods (lbs) production needs for current period (lbs) add: desired ending direct materials inventory (lbs) total direct material needs (lbs) less: beginning direct materials inventory (lbs) required direct material purchases (lbs) price per unit ($) budgeted direct material purchases =C3*C4 =20000*2*25% =C5+C6 5000 =C7-08 15 =C9*010 Clio 20000 1.5 =D3*D4 =20000*1.5*25% =D5+D6 7500 =D7-D8 10 =D9*D10 hence, the correct answer is d. Geo- $675,000 Clio- $300,000

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