Oak Industrial has estimated that production for the next five quarters will be:. Production Information 1st quarter, 2020 44,100 units 2nd quarter, 2020 40,000 units 3rd quarter, 2020 48,200 units 4th quarter, 2020 37,600 units 1st quarter, 2021 45,700 units Finished units of production require 6 pounds of raw material per unit. The raw material cost is $7 per pound. There is $277,830 of raw material on hand at the beginning of the first quarter, 2020. Oak desires to have 15 percent of next quarter's material requirements on hand at the end of each quarter. Prepare quarterly direct materials purchases budgets for Oak Industrial for 2020.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Oak Industrial has estimated that production for the next five quarters will be:.
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Production Information
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1st quarter, 2020
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44,100 units
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2nd quarter, 2020
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40,000 units
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3rd quarter, 2020
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48,200 units
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4th quarter, 2020
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37,600 units
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1st quarter, 2021
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45,700 units
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Finished units of production require 6 pounds of raw material per unit. The raw material cost is $7 per pound. There is $277,830 of raw material on hand at the beginning of the first quarter, 2020. Oak desires to have 15 percent of next quarter's material requirements on hand at the end of each quarter.
Prepare quarterly direct materials purchases budgets for Oak Industrial for 2020.
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