Question

Orr Company makes and sells a single product call ed a Bik. It takes four yards of Material A to make one Bik. Budget ed production of Biks for the next three months is as follows: February March April Budgeted Biks to be produced 21,000 units 26,000 units 33,000 units The company wants to maintain monthly ending inve ntories of Material A equal to 29% of the next month's production needs • Material A costs $1.75 per yard. The company is in the process of preparing a direct materials purchases budget. Calculate the total cost of material A budgeted t o be purchased in March.

Answer 1

Answer to Question 1:

March 26000 April 33000 132000 Orr Company Direct Material Purchase Budget February Budgeted production (units) 21000 Materials requirements per unit 4 Materials needed for production (yard) 84000 Budgeted ending inventory (yards) 30160 Total materials requirements (yards) 114160 Beginning inventory (yards) 24360 Materials to be purchased (yards) 89800 | Cost per yard 1.75 1 Total budgeted direct materials cost 157150 104000 38280 142280 30160 112120 1.75 196210

Answer to Question 2:

Detmer Enterprises Production Budget Next month's budgeted sales (units) Ratio of inventory to future sales Budgeted ending inventory (units) Budgeted unit sales for month Required units of available production Budgeted beginning inventory (units) Units to be produced September 6400 19% 1216 4900 6116 931 5185

Answer to Question 3:

Manufacturing cost = Direct materials + Direct labor + Manufacturing overhead
Manufacturing cost = $30,000 + $40,000 + $20,000
Manufacturing cost = $90,000

Cost of goods manufactured = Beginning work in process + Manufacturing cost - Ending work in process
$95,000 = Beginning work in process + $90,000 - $15,000
Beginning work in process = $20,000