Sacco Industries manufactures a popular interactive stuffed animal for children that requires three computer chips inside each toy. The company pays $2 for each computer chip. To help to guard against stockouts of the computer chip, Sacco 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: (Click the icon to 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. Sacco Industries Direct Materials Budget For the Months of January through March January Units to be produced Multiply by: Quantity of direct materials needed per unit Quantity needed for production Plus: Desired ending inventory of direct materials Total quantity needed Less: Beginning inventory of direct materials Quantity to purchase Multiply by: Cost per unit Total cost of direct material purchases 5,600 3 16,800 3,600 20,400 4,200 16,200 February 4,800 3 14,400 3,150 17,550 3.600 13,950 March 4,200 3 12,600 3,000 15,600 3,150 12,450 Quarter 14,600 3 43,800 3,000 46,800 4,200 42,600 Data table January..... February.... March April ...... Stuffed animals to be produced 5,600 4,800 4,200 4,000 Print Done X
Sacco Industries manufactures a popular interactive stuffed animal for children that requires three computer chips inside each toy. The company pays $2 for each computer chip. To help to guard against stockouts of the computer chip, Sacco 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: (Click the icon to 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. Sacco Industries Direct Materials Budget For the Months of January through March January Units to be produced Multiply by: Quantity of direct materials needed per unit Quantity needed for production Plus: Desired ending inventory of direct materials Total quantity needed Less: Beginning inventory of direct materials Quantity to purchase Multiply by: Cost per unit Total cost of direct material purchases 5,600 3 16,800 3,600 20,400 4,200 16,200 February 4,800 3 14,400 3,150 17,550 3.600 13,950 March 4,200 3 12,600 3,000 15,600 3,150 12,450 Quarter 14,600 3 43,800 3,000 46,800 4,200 42,600 Data table January..... February.... March April ...... Stuffed animals to be produced 5,600 4,800 4,200 4,000 Print Done X
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Sacco Industries manufactures a popular interactive stuffed animal for children that requires three computer chips inside each toy. The company pays $2 for each computer chip. To help to guard against stockouts of the
computer chip, Sacco 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:
(Click the icon to 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.
Sacco Industries
Direct Materials Budget
For the Months of January through March
January
Units to be produced
Multiply by: Quantity of direct materials needed per unit
Quantity needed for production
Plus: Desired ending inventory of direct materials
Total quantity needed
Less: Beginning inventory of direct materials
Quantity to purchase
Multiply by: Cost per unit
Total cost of direct material purchases
5,600
3
16,800
3,600
20,400
4,200
16,200
February
4,800
3
14,400
3,150
17,550
3.600
13,950
March
4,200
3
12,600
3,000
15,600
3,150
12,450
Quarter
14,600
3
43,800
3,000
46,800
4,200
42,600
Data table
January.....
February....
March
April ......
Stuffed animals to be produced
5,600
4,800
4,200
4,000
Print
Done
X
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