Donaldson Industries manufactures a popular interactive stuffed animal for children that requires four computer chips inside each toy. The company pays $1 for each computer chip. To help to guard against stockouts of the computer chip, Donaldson 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: 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. Production schedule Donaldson Industries Direct Materials Budget For the Months of January through March January February March Quarter January.... Units to be produced 5,600 4,200 4,900 14,700 February 4 March Multiply by: Quantity of direct materials needed per unit Quantity needed for production 22,400 16,800 19,600 58,800 April 4,200 4,900 4,000 4,000 Plus: Desired ending inventory of direct materials Total quantity needed 26,600 21,700 23,600 62,800 4,200 4,900 Less: Beginning inventory of direct materials Quantity to purchase 17,500 18,700 Multiply by: Cost per unit Total cost of direct material purchases 1.00 $ 1.00 $ 1.00 $ 1.00 17,500 $ 18,700 Stuffed animals to be produced 5,600 4,200 4,900 4,000 Print Done - ☑
Donaldson Industries manufactures a popular interactive stuffed animal for children that requires four computer chips inside each toy. The company pays $1 for each computer chip. To help to guard against stockouts of the computer chip, Donaldson 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: 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. Production schedule Donaldson Industries Direct Materials Budget For the Months of January through March January February March Quarter January.... Units to be produced 5,600 4,200 4,900 14,700 February 4 March Multiply by: Quantity of direct materials needed per unit Quantity needed for production 22,400 16,800 19,600 58,800 April 4,200 4,900 4,000 4,000 Plus: Desired ending inventory of direct materials Total quantity needed 26,600 21,700 23,600 62,800 4,200 4,900 Less: Beginning inventory of direct materials Quantity to purchase 17,500 18,700 Multiply by: Cost per unit Total cost of direct material purchases 1.00 $ 1.00 $ 1.00 $ 1.00 17,500 $ 18,700 Stuffed animals to be produced 5,600 4,200 4,900 4,000 Print Done - ☑
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Donaldson Industries manufactures a popular interactive stuffed animal for children that requires four computer chips inside each toy. The company pays $1 for each computer chip. To help to
guard against stockouts of the computer chip, Donaldson 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:
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.
Production schedule
Donaldson Industries
Direct Materials Budget
For the Months of January through March
January
February
March
Quarter
January....
Units to be produced
5,600
4,200
4,900
14,700
February
4
March
Multiply by: Quantity of direct materials needed per unit
Quantity needed for production
22,400
16,800
19,600
58,800
April
4,200
4,900
4,000
4,000
Plus: Desired ending inventory of direct materials
Total quantity needed
26,600
21,700
23,600
62,800
4,200
4,900
Less: Beginning inventory of direct materials
Quantity to purchase
17,500
18,700
Multiply by: Cost per unit
Total cost of direct material purchases
1.00 $
1.00 $
1.00 $
1.00
17,500 $
18,700
Stuffed animals to be produced
5,600
4,200
4,900
4,000
Print
Done
-
☑
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