Question

Vista Electronics, Inc. manufactures two different types of coils used in electric motors. In the fall of the current year, Erica Becker, the controller, compiled the following data.

• Sales forecast for 20x0 (all units to be shipped in 20x0):

Product	Units			Price
Light coil		51,000		$	210
Heavy coil		31,000			310

• Raw-material prices and inventory levels:

Raw Material	Expected Inventories, January 1, 20x0				Desired Inventories, December 31, 20x0				Anticipated Purchase Price
Sheet metal		29,000	lb.			33,000	lb.		$	18
Copper wire		26,000	lb.			29,000	lb.			9
Platform		5,100	units			6,100	units			5

• Use of raw material:

	Amount Used per Unit
Raw Material	Light Coil				Heavy Coil
Sheet metal		4	lb.			5	lb.
Copper wire		2	lb.			3	lb.
Platform						1	unit

• Direct-labor requirements and rates:

Product	Hours per Unit				Rate per Hour
Light coil		4			$	15
Heavy coil		6				20

• Finished-goods inventories (in units):

Product	Expected January 1, 20x0				Desired December 31, 20x0
Light coil		16,000				21,000
Heavy coil		9,000				10,000

• Production overhead:

Overhead Cost Item	Activity-Based Budget Rate
Purchasing and material handling	$	0.70	per pound of sheet metal and copper wire purchased
Depreciation, utilities, and inspection	$	6.00	per coil produced (either type)
Shipping	$	2.00	per coil shipped (either type)
General production overhead	$	4.00	per direct-labor hour

3. Prepare the raw material purchases budget (in quantities) for 20x0.

Answer 1

Ans:Raw materials purchases Budget( in quantities)

Particulars	Sheet Materials	Copper wires	Platforms
Materials Required for Light Oil	(56,000*4)= $224,000	(56,000*2)= $ 112,000	Nil
Materials required for heavy oil	(32,000* 5)=$160,000	(32,000*3)= $96,000	(32,000*1)=$32,000
Total Materials required	$ 384,000	$ 208,000	$32,000
Less: Opening inventories	(29,000)	(26,000)	(5,100)
Add: Closing Inventories	33,000	29,000	6,100
Materials required to purchase	$388,000	$211,000	$33,000
Total Materials Required to purchase	$388,000+$211,000+$33,000= $632,000

Materials Required for Light Coil = 51,000-16,000+21,000 = 56,000

Materials required for Heavy Coil= 31,000- 9,000+10,000 = 32,000