4.. Micro Products Inc. has developed a very powerful electronic calculator. Each calculator requires three small “chips" that cost $2 each and are purchased from an overseas supplier. Micro Products has prepared a production budget for the calculator by quarters for year 2 and for the first quarter of year 3, as shown here: Year 2 Year 3 Q1 Q1 Q2 Q3 Q4 Required production in 60,000 units 90,000 150,000 100,000 80,000 The chip used in the production of the calculator is sometimes hard to get, so it is necessary to carry large inventories as a precaution against stock outs. For this reason, the inventory of chips at the end of a quarter must be equal to 20% of the following quarter's production needs. Some 36,000 chips will be on hand to start the first quarter of Year 2. Purchases of raw material are paid for in the following patter: 30% paid in the quarter the purchases are made,30% paid in the following quater and the remaining 40% paid in the second following quarter of sales. There is no accounts payable is outstanding at the beginning of the first quarter of Year 2; the amount will be paid in the first quarter of year 2. Required: a. Prepare a direct material budget by quarter for Year 2. b. Prepare a schedule of cash disbursement by quarter for Year 2.
4.. Micro Products Inc. has developed a very powerful electronic calculator. Each calculator requires three small “chips" that cost $2 each and are purchased from an overseas supplier. Micro Products has prepared a production budget for the calculator by quarters for year 2 and for the first quarter of year 3, as shown here: Year 2 Year 3 Q1 Q1 Q2 Q3 Q4 Required production in 60,000 units 90,000 150,000 100,000 80,000 The chip used in the production of the calculator is sometimes hard to get, so it is necessary to carry large inventories as a precaution against stock outs. For this reason, the inventory of chips at the end of a quarter must be equal to 20% of the following quarter's production needs. Some 36,000 chips will be on hand to start the first quarter of Year 2. Purchases of raw material are paid for in the following patter: 30% paid in the quarter the purchases are made,30% paid in the following quater and the remaining 40% paid in the second following quarter of sales. There is no accounts payable is outstanding at the beginning of the first quarter of Year 2; the amount will be paid in the first quarter of year 2. Required: a. Prepare a direct material budget by quarter for Year 2. b. Prepare a schedule of cash disbursement by quarter for Year 2.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:4. . Micro Products Inc. has developed a very powerful electronic calculator. Each calculator
requires three small “chips" that cost $2 each and are purchased from an overseas supplier. Micro
Products has prepared a production budget for the calculator by quarters for year 2 and for the first
quarter of year 3, as shown here:
Year 3
Q1
Year 2
Q1
Q2
Q3
Q4
Required production in 60,000
units
90,000 150,000 100,000 80,000
The chip used in the production of the calculator is sometimes hard to get, so it is necessary to
carry large inventories as a precaution against stock outs. For this reason, the inventory of chips at
the end of a quarter must be equal to 20% of the following quarter's production needs. Some
36,000 chips will be on hand to start the first quarter of Year 2. Purchases of raw material are paid
for in the following patter: 30% paid in the quarter the purchases are made,30% paid in the
following guater and the remaining 40% paid in the second following quarter of sales. There is no
accounts payable is outstanding at the beginning of the first quarter of Year 2; the amount will be
paid in the first quarter of year 2.
Required:
a. Prepare a direct material budget by quarter for Year 2.
b. Prepare a schedule of cash disbursement by quarter for Year 2.
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