Question

Becker Bikes manufactures tricycles. The company expects to sell 520 units in May and 650 units in June. Beginning and ending finished goods for May is expected to be 180 and 145 units, respectively. June’s ending finished goods is expected to be 155 units. Each unit requires 3 wheels at a cost of $22 per wheel. Becker requires 20 percent of next month’s material production needs on hand each month. July’s production units is expected to be 620 units.

Compute Becker’s direct materials purchases budget with respect to wheels for May and June.

Answer 1

Мay 520 June Eapected Units to be Sold Add: Ending Inventory of Finished Goods 650 145 155 665 805 Less: Beginning Inventory of Finished Goods Finished Goods Required to be Produced Wheels needed for required Production (485x3;660x3) -180 -145 485 660 1455 1980 Add: 20% of Next month production needs (660x3x20% for May; 620x3x20% for June) Quanitity of Wheels to be purchased 372 396 2352 1851 $22.00 $51,744.00 Cost Per Wheel $22.00 $40,722.00 Direct Materials Budgeted Purchases