I have to set up a direct material budget. I am aware of how to do the budget but the particular example that is presented has half of the information that we usually need to find the answr.

I am looking for the Production needs for the direct material budget. The information that I have is as followed:
1st quarter 2nd quarter 3rd quarter 4th quarter

Units to be produced 4,000.00 5,000.00 6,000.00 3,000.00

beg. Raw inventory 1st quarter 1,600 pounds
beg. acct. payable for 1st quarter 7,600.00

Mang. Desires to end each quarter with raw materials inventory = to 20% of the following quarters production needs. The desired ending inventory for the 4th quarter is 2,250 pounds. Mang plans to pay for 70% of raw material purchases in the quarter acquired and 30% in the following quarter acquired and 30% in the following quarter. Each unit requires 0.75 direct labor-hours and direct labor-hour workers are paid $14.00 a hour.

The only thing I need help with is computing the production needs. Thanks in advance!:)

It doesn't say how many pounds used per unit made! I don't see any way to figure that out. (In other words, you're not crazy. :-))

Where did you get this? Book, instructor? You called it an "example." If it's a book example, the info might be off in another paragraph somewhere. If the instructor did, the instructor may have just screwed up. But that is who you need to contact if you can't find that info anywhere.

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Originally Posted by morgaine300

It doesn't say how many pounds used per unit made!! I don't see any way to figure that out. (In other words, you're not crazy. :-))

Where did you get this? Book, instructor? You called it an "example." If it's a book example, the info might be off in another paragraph somewhere. If the instructor did, the instructor may have just screwed up. But that is who you need to contact if you can't find that info anywhere.

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I know it is hard to figure out but this is all of the information provided. The 1st, 2nd, 3rd, and 4th quarter are the forecast of units to be produced. Thanks for trying!

Direct material Budget
Budgeted production in calculators
Year 2
First Year 60.000
Second Year 90,000
Third Year 150,000
Fourth Year 100,000
Year 3
First Year 80,000
Inventory at the end of the quarter must equal 20% the following quarter's production needs
A total of 36,000 will be on hand to start the first quarter of Year 2
Prepare a direct material budget for chips by quarter and in total for year 2. At the bottom of your budget show the dollar amount of purchases for each quarter and for the year total