Question

Beckett Industries manufactures a popular interactive stuffed animal for children that requires two computer chips inside each toy. The company pays $1 for each computer chip. To help to guard against stockouts of the computer chip, Beckett Industries has a policy that states that the ending inventory of computer chips should be at least 25% of the following month's production needs. The production schedule for the first four months of the year is as follows: 33 (Click the icon to view the production schedule.) Requirement Prepare a direct materials budget for the first quarter that shows both the number of computer chips needed and the dollar amount of the purchases in the budget. Prepare the direct materials budget by first calculating the total quantity needed, then complete the budget. Data Table Beckett Industries Direct Materials Budget For the Months of January through March Stuffed animals to be produced January February March Quarter January ..... 5,000 Units to be produced 5,000 4,800 4,300 4,600 February .... 4,800 March .. Multiply by: Quantity of direct materials needed per unit Quantity needed for production 10,000 9,600|| 4,300 4,600 8,600 9,200 April ........ Plus: Desired ending inventory of direct materials Total quantity needed Print Done

Answer 1

Beckett Industries
Direct Material Budget
For the Month of January through March
	January	February	March	Quarter
Units to be produced	5,000	4,800	4,300	14,100
Multiply by: Quantity of direct materials needed per unit	2	2	2	2
Quantity needed for production	10,000	9,600	8,600	28,200
Plus:Desired ending inventory of direct materials	9,600 x 25% = 2,400	8,600 x 25% =2.150	9,200 x 25% = 2,300	6,850
Total quantity needed	12,400	11,750	10,900	35,050
Beginning inventory of raw materials	-2,500	-2,400	-2,150	-7,050
Raw material purchase	9,900	9,350	8,750	28,000
Price per unit	1	1	1	1
Direct Material Cost	$9,900	$9,350	$8,750	$28,000

Production during April = 4,600
Raw material per unit = 2
Raw material required during April = 4,600 x 2 = 9,200

Ending inventory of raw material for March = Production requirement for April x 25%

= 9,200 x 25%

= 2,300

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