Concept explainers
Direct materials budget (Learning Objective 2)
Moe Industries manufactures a popular interactive stuffed animal for children that requires four computer chips inside each toy. The company pays $3 for each computer chip. To help to guard against stockouts of the computer chip, Moe Industries has a policy stating that the ending inventory of computer chips should be at least 30% of the following month’s production needs. The production schedule for the first four months of the year is as follows:
Stuffed animals to be produced | |
January | 5,200 |
February | 4,800 |
March | 4,100 |
April | 4,700 |
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.
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- Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning