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Help prepare direct materials budget for 2nd quarter
Electro Company manufactures an innovative automobile transmission for electric cars. Management predicts that ending finished goods inventory for the first quarter will be 80,180 units. The following unit sales of the transmissions are expected during the rest of the year: second quarter, 211,000 units; third quarter 497,000 units; and fourth quarter, 239,000 units. Company policy calls for the ending finished goods inventory of a quarter to equal 38% of the next quarter’s budgeted sales. (Ending inventory for the first quarter does not comply with the company policy.) Each transmission required 0.57 pounds of a key raw material. Electro Company aims to end each quarter with an ending inventory of direct materials equal to 38% of next quarter’s budgeted material requirements. Direct materials cost $169 per unit. Prepare a direct materials budget for the second quarter. 2nd quarter’s budgeted production units is 319,680, materials needed for 2nd quarter production is 182,218 lbs and 2nd quarter’s budgeted beginning inventory is 69,243 lbs. What is 2nd quarter’s budgeted ending inventory lbs and what is the materials price per lb?
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