Question

exercise 20-10 (algo) manufacturing: direct materials budget lo p1

electro company budgets production of 630,000 electric panels in the second quarter and 700,000 electric panels in the third quarter. each panel requires 0.80 pound of direct material at a cost of $1.40 per pound. the company desires to end each quarter with an ending inventory of this material equal to 20% of next quarters budgeted materials requirements. beginning inventory of this material is 100,800 pounds.

prepare a direct materials budget for the second quarter.
note: enter \per unit\ answers in two decimal places.

electro company
direct materials budget
second quarter
units to produce: 630,000 units
materials needed for production (pounds)
total materials required
materials to purchase (pounds)
cost of direct materials purchases

Explanation:

Calculate materials needed for production

Using the Direct Materials Budget knowledge point

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Determine desired ending inventory

Using the Materials Inventory Policy knowledge point

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Calculate total materials required

Using the Direct Materials Budget knowledge point

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Calculate materials to purchase

Using the Direct Materials Budget knowledge point

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Calculate cost of direct materials purchases

Using the Materials Purchase Cost knowledge point

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Answer:

ELECTRO COMPANY <br> Direct Materials Budget <br> Second Quarter
Materials requirements per unit	0.80	pounds
Materials needed for production (pounds)	504,000
Add: Desired ending inventory (pounds)	112,000
Total materials required	616,000
Less: Beginning inventory (pounds)	100,800
Materials to purchase (pounds)	515,200
Cost per pound	\$1.40
Cost of direct materials purchases	\$721,280