Question

Exercise 10-7 Your answer is partially correct. Try again. Oak Ridge 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. Oak Ridge 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 Oak Ridge Industrial for 2017. Oak Ridge Industrial Direct Materials Purchases Budget For the Year Ending December 31, 2017 Quarter 2 Quarter 1 Quarter 3 Quarter 4 Year TUnits to be produced 313600 282240 337120 258720 1191680 T cost of raw material per unit Cost of raw material needed for production + 2195200 1975680 2359840 1811040 8311760 Tada . 'Desired ending inventory of raw materiale Total material needed Loss Beginning inventory of raw material Required raw material purchases +

Answer 1

Oak Ridge Industrial Direct Material Purchases Budget For The Year Ending December 31, 2017
	Quarter 1	Quarter 2	Quarter 3	Quarter 4	Year
Units to be produced	40,000	36,000	43,000	33,000	152,000
Raw material required per unit (in pounds)	8	8	8	8	8
Total raw material needed	320,000	288,000	344,000	264,000	1,216,000
Cost of raw material per unit	$7	$7	$7	$7	$7
Cost of raw material needed for production	$2,240,000	$2,016,000	$2,408,000	$1,848,000	$8,512,000
Add: Desired ending inventory	241,920 (2,016,000*12%)	288,960 (2,408,000*12%)	221,760 (1,848,000*12%)	275,520 (41,000*8*$7)*12%	275,520
Total material needed	2,481,920	2,304,960	2,629,760	2,123,520	8,787,520
Less: Beginning inventory of raw material	(268,800)	(241,920)	(288,960)	(221,760)	(268,800)
Required raw material purchases	$2,213,120	$2,063,040	$2,340,800	$1,901,760	8,518,720