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Prepare a direct materials budget for the second quarter. Units to produce ELECTRO COMPANY Direct Materials Budget Materials needed for production (pounds) Total materials required Materials to purchase (pounds) Second Quarter 670,000 units

Prepare a direct materials budget for the second quarter. Units to produce ELECTRO COMPANY Direct Materials Budget Materials needed for production (pounds) Total materials required Materials to purchase (pounds) Second Quarter 670,000 units

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Electro Company

Electro Company budgets production of 670,000 electric panels in the second quarter and 740,000 electric panels in the third quarter. Each panel requires 0.80 pound of direct material at a cost of $2.00 per pound. The company desires to end each quarter with an ending Inventory of this material equal to 20% of next quarter's budgeted materials requirements. Beginning Inventory of this material Is 107,200 pounds. Prepare a direct materials budget for the second quarter. Units to produce ELECTRO COMPANY Direct Materials Budget Materials needed for production (pounds) Total materials required Materials to purchase (pounds) Cost of direct materials purchases Second Quarter 670,000 units
Transcribed Image Text:Electro Company budgets production of 670,000 electric panels in the second quarter and 740,000 electric panels in the third quarter. Each panel requires 0.80 pound of direct material at a cost of $2.00 per pound. The company desires to end each quarter with an ending Inventory of this material equal to 20% of next quarter's budgeted materials requirements. Beginning Inventory of this material Is 107,200 pounds. Prepare a direct materials budget for the second quarter. Units to produce ELECTRO COMPANY Direct Materials Budget Materials needed for production (pounds) Total materials required Materials to purchase (pounds) Cost of direct materials purchases Second Quarter 670,000 units
Electro Company manufactures transmissions for electric cars. Management reports ending finished goods Inventory for the first quarter at 236,500 units. The following unit sales are budgeted during the rest of the year. second quarter, 473,000 units; third quarter, 219,000 units; and fourth quarter, 431,500 units. Company policy calls for the ending finished goods Inventory of a quarter to equal 50% of the next quarter's budgeted unit sales. Prepare a production budget for both the second and third quarters that shows the number of transmissions to manufacture. ELECTRO COMPANY Production Budget Budgeted sales units Add: Desired ending inventory Next period budgeted sales units Ratio of inventory to future sales Desired ending inventory units Total required units Less: Beginning inventory units Units to produce Second Quarter 473.000 50% Third Quarter 219,000 50%
Transcribed Image Text:Electro Company manufactures transmissions for electric cars. Management reports ending finished goods Inventory for the first quarter at 236,500 units. The following unit sales are budgeted during the rest of the year. second quarter, 473,000 units; third quarter, 219,000 units; and fourth quarter, 431,500 units. Company policy calls for the ending finished goods Inventory of a quarter to equal 50% of the next quarter's budgeted unit sales. Prepare a production budget for both the second and third quarters that shows the number of transmissions to manufacture. ELECTRO COMPANY Production Budget Budgeted sales units Add: Desired ending inventory Next period budgeted sales units Ratio of inventory to future sales Desired ending inventory units Total required units Less: Beginning inventory units Units to produce Second Quarter 473.000 50% Third Quarter 219,000 50%
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