Question

Tarjee Industrial has estimated that production for the next five quarters will be:

Production Information

1st quarter, 2017 40,000 units

2nd quarter, 2017 36,000 units

3rd quarter, 2017 43,000 units

4th quarter, 2017 33,000 units

1st quarter, 2018 41,000 units

Finished units of production require 8 pounds of raw material per unit. The raw material cost is $7 per pound. There is $268,800 of raw material on hand at the beginning of the first quarter, 2017. Tarjee desires to have 12 percent of next quarter's material requirements on hand at the end of each quarter.

Prepare quarterly direct materials purchases budgets for Tarjee Industrial for 2017.

Answer 1

	Tarjee Industrial
	Direct Materials Purchases Budget
	For the Year Ending December 31, 2017
	Quarter 1	Quarter 2	Quarter 3	Quarter 4	Year
Units to be produced	40000	36000	43000	33000	152000
Cost of raw material per unit	56	56	56	56	56
Cost of raw material needed for production	2240000	2016000	2408000	1848000	8512000
Add desired ending inventory of raw material	241920	288960	221760	275520	275520
Total material needed	2481920	2304960	2629760	2123520	8787520
Less beginning inventory of raw material	268800	241920	288960	221760	268800
Required raw material purchases	2213120	2063040	2340800	1901760	8518720